When Selling Receivables Makes Sense

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Invoice Dollar Bill --- Image by © Images.com/CorbisAn alien from an all-cash planet would gaze in wonder at the trade credit system that runs the Earthly economy.  Let’s review:

Jack Brown invests his life savings to open a surfboard manufacturing business, MI Board, Inc.  It does well, attracting the interest of the media, surfers and retailers.  A few small shops in California put his boards on consignment.  They turn some heads, win some competitions, and MI lands $300,000 in initial orders from Becker, RonJon’s and HSN.  Cool.

After celebrating, Jack reads the purchase orders from his new customers.

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