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Account Receivable Financing
the semantics of accounts receivable financing and factoringSemantics can really be confusing, especially with a term like accounts receivable financing. In technical terms, financing means a loan involving two parties, usually a bank and you. Financing terms are based on your credit. Factoring on the other hand means a purchase of your invoice and involves three parties, the factoring organization (for instance, IFG Network who buys your invoice), you and your client whom you’ve invoiced. Fees and discount terms are based on your customers or clients’ credit, not yours.
Compounding matters, the term "accounts receivable financing" is often confused with accounts receivable factoring, which is really invoice factoring. Since IFG Network is in the factoring business, we will concentrate on the accounts receivable financing usage as a phrase to mean invoice or spot factoring.
As already pointed out, one of the major differences between factoring and bank loans is factors can often make funds available when banks cannot or will not. This is because factors are mostly concerned with the credit worthiness of the debtor, (the customer you invoiced for goods or services) while banks are primarily concerned with your company's credit worthiness.
Thus, factoring can be an important tool in the small business' arsenal of financial planning. Factoring can be a source of working capital for the startup business or it can provide spot cash to tide the company over a rough cash flow stretch. This is especially true for the underfunded, recently launched small business which often has difficulty securing financing from their bank.
One point worth considering is that quite often accounting and legal professionals are not up to speed on factoring practices. Therefore they sometimes discount factoring as being a viable choice for the rapidly growing or turnaround business.
To get the straight scoop on accounts receivable financing or factoring we invite you to fill out our inquiry form by clicking here. An IFG Network representative will be in touch shortly. Or you can call the IFG Network at 877-210-9748.
Testimonials:
“Services provided by IGF allowed us to capitalize on significant growth opportunities over a short period of time; tripling our workforce and increasing our revenue 10 fold”
Carol Craig
President,
Craig Technologies
