payout of the term “bank loan” to a small business owner is frequently enough to elicit an extremely strong and visceral response and the easy truth of the matter is that the common business bank loan is really a fairly contentious and controversial subject within the business enterprise community. On one hand, a bank loan provides the business enterprise owner with a source of capital that they otherwise would not have, which in turn can mean that bold ambitions of expanding and developing the business in a particular direction can be more fully achieved and accomplished with at the least disruption.
This is especially significant in highly competitive sectors of the market, as any way of measuring delay can ultimately result a small business that chose to postpone any kind of development or alterations to the manner in which they do business being overtaken by a rival. The downside here however, is that the loan will be required to be paid back and so if the business enterprise is struggling to create enough revenue, or worse yet, is already in debt, then the repayment maybe an excessive amount of a burden for its finances.
Furthermore, so that you can actually access a bank loan, a small business will typically be required to secure assets that it owns as collateral, and so a noncompliance with the terms of the loan will ultimately imply that the assets secured as collateral maybe seized by the lender.
Thankfully, there is an alternative solution strategy for the struggling business proprietor who is seeking to secure another external source of capital finance to supply their company with a essential kick start: a receivable financing company.
A receivable financing company, or perhaps a factoring agency as they oftentimes described within business parlance, is really a business entity that will purchase outstanding invoice accounts from a company and then supply the client company with a amount of cash upon receipt of the invoices. The receivable financing company will assume full, legal responsibility for the collection process of the money owed by the client specified on the invoice.
Once the client has paid the entire balance owed to the receivable financing company, the factoring agency will release the remainder of the funds owed to the client company….with a small deduction made from the funds received from your client so as to cover the expenses they have incurred.
One of the major great things about utilizing a factoring agency is that your client company will be guaranteed to receive a fairly massive amount money in an extremely short space of time indeed which effectively eliminates and protects contrary to the risks an unpredictable and capricious degree of cashflow will pose to a client company.
Furthermore, this technique of business financing will effectively mean that the agency is in charge of the collection process thereby freeing up the time and money of your client company who will not need to cope with the chasing up of fees or commissions owed.