One of the many dilemmas that companies face is how to obtain financial resources. A simple way to say it would be how can your business get cash fast? One of the major drawbacks and pitfalls that most businesses encounter is the long wait before a big check from a certain client is paid. Yes your accounts receivables may be assets but they cannot be spent. At least not yet up until your client pays what they owe you. One good option or means to hasten your long receivables to raise funds or cash is with the use of single invoice factoring whether spot, traditional, recourse or non recourse. How then can you get your invoice factored? Here are some tips to help you raise your needed cash fast, easy, simple and less costly.
- Do your business well if not best.
First and foremost you have to create quality and value through the products or services that you offer. Of course you cannot expect loyal and numerous customers if you have nothing to offer in the first place. Without customers, there are no receivables therefore there is nothing to factor at all.
- See to it that your accounts receivables are of value.
It is not enough that you have receivables and invoices. They have to be of value too. Meaning, they are not likely to lead to non collection and bad debts. Although the absence of such is completely inevitable you should see to it that at least eighty percent of your factored invoices will be paid by the clients who owe you.
- Screen out customers to whom you extend credit to.
In relation to the previous one, screen out your customers and determine who has good credit history and who are always delayed and who those that default in payment are. It would be best to extend credit only to a select few who fulfils their obligations.
- Get to researching and establish a good standing with your chosen factor.
It is also a must for you to go all out and research for the best factoring company to suit and complement your needs. There is a lot who offer this type of funding scheme and all of them have different services, fees and expertise.
- Decide the type of factoring you would want to subject your invoices to.
To finally get your invoice factored, you have to choose a type. Recourse requires you to buy back any uncollected invoice. This is the cheapest kind. If you want the factor to bear all the risk in case a client defaults in payment, there is the Non Recourse. For those whose receivables are often long, you may wish to subject all of them to the Traditional type but if you want to factor just one then we have Single Invoice or Spot.