Have you ever considered Invoice Factoring? This is essentially another term for Accounts Receivable Factoring and is completely interchangeable.

When you analyze your Accounts Receivable Collections, and you see the number of days to collect your Accounts Receivable and how many invoices become overdue, remember this is data about the odds of collecting your Invoices, not how to increase sales.

Do you consider a large Accounts Receivable as a bad thing? Most people do. To determine if this is a bad thing, or good, it will depend on how the Accounts Receivable is made up. Here is an example.

If you have an abundance of Inventory and you are nearing the end of your season for a particular type of goods. You will have to pay for warehouse space for the next several months until the season comes back. You can have an opportunity to sell a large portion of your goods at a discount and clear out your warehouse. What would you do?

Suppose this was a new customer, you never had dealings with them so you have no history to gauge their account on but you do know that you will have to wait 60-90 days to get paid, would you accept the order?

Certainly not if we think in terms of the traditional role of the area of credit and collection and containment of risk.

Of course yes, if we consider the area of credit as a generator of value. Even better, use Invoice Factoring to collect on the payment with 48 hours of delivery of the goods and clear out the warehouse. Yes it will cost a bit in terms of a fee for Invoice Factoring, but now you will not have to pay for warehouse space.

This is but one simple way that Invoice Factoring can assist your company. In the economy today, Invoice Factoring will be a large financial tactic used in the origination of Cash Flow for many companies.

Besides the facts that this can stimulate new sales, you can also help out your current customer base to grow this opportunity. As you are aware, it is much more costly to originate new clients than it is to keep existing relationships in tact. Not only will Invoice Factoring help you with this, but it will off set Cashflow constraints when invoices do get a bit extended. Speak to your Commercial Finance Broker about the programs that best fit your business.