Transportation Factoring Company Reviews

 

Factoring Companies- A  Chat With A  Small business owner

 

I’ve owned 11 businesses and still own four of them and  just in case you ‘d like to know one of them has an Letter Of Intent to Buy in hand and got to profitability  taking advantage of  INVOICE FACTORING ONLY and is  entirely – as in totally – debt free.  Exactly why? They  never ever had to borrow. See Transportation Factoring  Company Reviews

 

 Concerning having used or not used factoring: With three of them and soon  to become a fourth I have  made use of  invoice factoring.  Just why? You can capitalize the business without borrowing because factoring is not borrowing. FYI: One of those businesses fulfilled orders it could only have  hoped for  carrying out had it not used  invoice discounting. It’s the one with the LOI in hand in fact.

 

 Invoice discounting, like it or not, is actually a front end transaction that capitalizes a company without their having to borrow. It’s not complicated and only dates back to the Eqyptians … and still works.  About it not opening the flood gates? If you have a million dollars in invoices and can not borrow against them nor  turn them to cash your business (my businesses were any way until I factored) are dead in the water until you get in some cash. If you have some alternative to that then  let us all know . An invoice is a non-performing asset  until you can turn it into cash but I am sure that I’ll stand corrected.

 

QUESTION: If you as a business owner could  employ a sales person and they would help you access sales you  normally could not BUT you had to pay them a 2 % – 3 % – 5 % commission BUT they would increase your business 10 or 20 or 30 % would you hire that person? If you say yes to this then you are endorsing factoring. It’s not different than a credit card transaction. The business owner is selling the transaction to a third party to receive the payment so how is factoring different from cc transactions?

 

 About the cost of  receivable factoring? It appears that  surrendering 2 % on the front end of a credit card transaction is  ok (on a daily basis and using your  formulation in your reply  incidentally that calculates annually to 760 % by the way but we both know that this isn’t true now don’t we?). Why should a retailer accept cc processing? More business  perhaps?  More substantial sales? And what are doing? They are selling the transaction to the credit card company. Yes? No? FYI: I offer that service too … not  rocket technology.

 

 Invoice discounting  can be be  utilized by a company that is turning away sales and can not grow otherwise and note: The only time that they  use receivable factoring is when they  need to have working capital to  satisfy an order that they would otherwise lose. It’s like the sales commission: The only time you pay the salesman is when he sells i.e. it’s a sale you either didn’t have with the salesman or it’s a sale you can’t fulfill because your money if  shackled in your invoices and you can’t get it out.

 

That said it’s pretty simple equation when you can not access liquidity:.

1.) Factor and  surrender 3 % of the sale OR  dismisses the sale and  fail the customer and lose my profit margin … 10 %? 20 %? 30 %?

OR.

2.)  Use invoice factoring  and give up 3 % of the sale OR kiss off the sale and disappoint the customer and lose my profit margin … 10 %? 20 %? 30 %?

OR.

3.)  Use factoring  and give up 3 % OR kiss off the sale and disappoint the customer and lose my profit margin … 10 %? 20 %? 30 %?

What  aspect of being in business to maximize a profit am I  skipping?

 

As to the 24 % annually(or as above it would be 36 %) let’s keep in mind that the owner of the business above got to complete transactions that he or she otherwise wouldn’t have  had the chance to. Not a lot different than the retailer that get’s to close a sale with a customer comes in with their cc is it?

 

Also please explain this: A bank loans someone money ($100,000) at 9 % annually. A factor  gives $100,000 a month at a 2 % discount and  carries this out 12 times over the course of a year. Hmmmmnnn … the bank delivered $100K for 9 % BUT the factor  in fact delivered $1,200,000 for 24 % so which is the  far better  offer? The bank? It owns you: Invoices, inventory, equipment, your house and your signature … the  factoring firm has a right to your invoices: End. Which is  more desirable?

 

 Furthermore:  Precisely what happens with the bank when you need $200,000 and you are only approved for $100K? If you have invoices the  factoring firm funds you and you make the sales and  get the profit … the bank  says to you, “Let’s see how you do over the  subsequent year and come back” or the infamous reply, “We don’t like your collateral and your credit is weak” and the bottom line is that they don’t have ability to take the risk or perform the work that a  factoring firm does.

 

REMEMBER: MONEY IS NOT LOANED IN A FACTORING TRANSACTION. If you can not accept or  comprehend that then there is no sense in conversing  anymore on this …

 

In closing: To  associate to the last statement that  invoice factoring at 2 % monthly in discounted interest costs 24 % in interest margins annually then I’ll agree to that but only if it can be  acknowledged that a company that sells product with a 30 % monthly margin hereby  generates a 360 % annual profit to which you will  yell back “They’re not the same” and to that you ‘d be right:  Using a factoring company and borrowing money from a bank …  Are definitely not the same. Also see Transportation Factoring  Company Reviews

 

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