Check out the Open Forum Blog. It’s a brand new group blog where I will be contributing once a week.
My first contribution is about factoring receivables (i.e., selling your invoices) as a method of financing growth of your business. Now, on the surface, factoring may sound kind of dry. (“Dry?,” you’re thinking. “Try Sahara Desert.”)
Actually, it’s more interesting than that. 🙂
Invoice factoring sometimes is treated like the Rodney Dangerfield of financing — in some quarters it just “gets no respect.”
Yet, factoring is a well established way of accelerating business cash flow. Businesses use it as a way of not getting caught in the small business squeeze — you know, that spot between customers who owe invoices and employees who expect their paychecks.
To understand why it doesn’t “get no respect,” read: “Factoring Receivables: When it Makes Sense, When Not.”
Interesting read. I can definitely see how factoring can relieve funds and tension. It seems that it could also free up some extra time to concentrate your efforts on other aspects of your business. Accounts receivables can be a real headache.
Factoring can be a good idea. With invoicing we sometimes to forget to ask our customers when is their month end cut off date for processing invoices. By making sure our invoices are in before that date eg. the 23rd of the month, can mean the difference of payment within 30 days instead of at least 60 days.
I think that factoring is a valid option of getting your money on time, in a safe way.
Do you know the roles of Federated Media and American Express on the Open Forum Blog?
I belong to the Federated Media network, which places ads on Small Business Trends and other sites. Through that advertising support, that’s how I can afford to pay for all the services of running this site and providing it at no cost to readers. (Otherwise I would not be able to do it.)
American Express OPEN is the sponsor of that OPEN Forum blog site. I get compensated from the ad revenues in exchange for writing on that blog.
I write a lot of different places on the Web. 🙂
If businesses paid more attention to collecting receivables, they could improve cash flow tremendously. Part of the problem is that to most people it is like asking for the order and they are afraid to ask for their money. They also do not pay attention to their customer’s cutoff dates for payables and therefore do not send out invoices in time thus sometimes missing a 30 day collection cycle.