by Kim Lavine
Factoring is an essential part of any successful business, yet few businesses understand it, and that can cost your $100,000's. Here's what you need to know:
What is Factoring?
- Factoring is when a company sells its account receivables to a bank or financial institution, which purchases them at a discount of anywhere from one to ten percent typically.
- The advantage is that the company selling them gets their cash in one day instead of 30 or 60, freeing up cash flow while taking the worry and administration out of collecting bills, while the financial institution that buys them makes interest.
- A lot of companies use factors, and a lot of them use the same big factors, so if your credit goes bad at one account, it will go bad at them all. The good thing is that once you get approved for a credit line, you can use that line with other vendors.
Want to Know More?
Watch this video courtesy of CIT'S FACTORING UNIVERSITY. CIT is one of the biggest and most prestigious factors in the world and is located in New York City.
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