The very reference to 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 problem is that the common business bank loan is really a fairly contentious and controversial subject within the business enterprise community. Similarly, 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 enterprise in a particular direction could be more fully achieved and accomplished with at the least disruption.
This is especially significant in highly competitive sectors of the market, as any measure of delay can ultimately result a small business that chose to postpone any sort 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 repaid and so if the business is struggling to create enough revenue, or even worse, is already in debt, then your repayment maybe an excessive amount of a burden because of its finances.
Furthermore, so that yoursite.com can actually gain access to a bank loan, a 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 strategy for the struggling business proprietor who is seeking to secure another external way to obtain capital finance to supply their company with a much needed kick start: a receivable financing company.
A receivable financing company, or a factoring agency because they oftentimes described within business parlance, is really a business entity which will purchase outstanding invoice accounts from the 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 rest of the funds owed to your client company….with a small deduction made from the funds received from the client in order to cover the expenses they have incurred.
One of the major benefits of utilizing a factoring agency is that your client company will be guaranteed to get a fairly massive amount money in a very short space of time indeed which effectively eliminates and protects contrary to the risks an unpredictable and capricious amount of cash flow will pose to a client company.
Furthermore, this technique of business financing will effectively mean that the agency is responsible for the collection process thereby freeing up enough time and money of the client company who will not have to contend with the chasing up of fees or commissions owed.