Search:

Is accounts receivable factoring the perfect source of finance to resolve your cash flow issues?

What is cash flow and why is it important to my organization?
Cash flow as a common expression may be used differently depending on environment, and certain cash flow definitions may be oriented by analysts and bookkeepers for their own use. For our purposes, cash flow is an accounting expression that refers to the amounts of cash being received and used by a organization during a specific period of time or at times tied to a specific project. Cash flow basically means "Do I have a sufficient amount of cash in my bank account to cover my expenses?"

Cash flow is king regardless of what product or service you offer; it is the lifeblood of any organization. Hopefully you're persuaded of the significance of watching your cash flow - but how do you keep it healthy? Make sure that your cash flow doesn't require certain invoices being paid in a timely manner. A precise cash flow projection can alert you to turmoil well before it strikes.

Paying attention to your cash flow
This is especially essential in the startup phase of your organization. If you know you can endure when things aren't going well, then you know you'll be thrilled if the best-case scenario comes about. When preparing the short or long-term funding needs of a organization, it is more essential to estimatethe likely cash needs than to estimate profitability, etc. Bear in mind that more companies go bankrupt for lack of cash flow than for want of profit.

Why should I consider opening a factoring line to improve cash flow?
Let's be honest, factoring should not always be your first choice to improve cash flow. If you can get your customers to pay on time, early or even COD that is the ultimate solution. Besides getting client to pay on time, you may also want to consider getting a bank line of credit. Bank lines of credit are usually less expensive than a factoring line, but don't offer all of the additional features that a factoring company can provide. Banks want to get their payments on time, but don't assist you in any way in operating your organization more effectively.

Good factoring companies should be looking over your accounts receivable on regular basis. You will be notified when invoices are going unpaid or when your accounts receivable aging is starting to look bad. Many factoring companies will even make calls to confirm your invoices and verify that the payables department of your customer has received the invoice and plans to pay it on time. When you consider these benefits compared with the cost of hiring a receivables clerk, the cost of factoring doesn't look so bad.

Business factoring can be especially effective when used in conjunction with a bank line. Some factoring companies can work with your bank to give you the best of both worlds. Your organization can have the low over all cost of bank financing AND the flexible cash flow of a organization factoring line.

In conclusion, you should realize that many profitable businesses go bust due to poor cash flow management. Having a factoring line may be just what the doctor ordered.

If your organization is experiencing short-term cash flow concerns or needs to fund rapid expansion, you may want to consider using our organization factoring services. Please check out our website at http://www.btbcapital.com.

Article Source: http://www.topicinfo.com

Greg is the marketing director for a finance company and an evangelist for meditation. If your business is experiencing short-term cash flow issues or needs to fund rapid growth, you may want to consider using our business invoice factoring services. Please visit our website at www.btbcapital.com.

Please Rate this Article

Not yet Rated

Click the XML Icon Above to Receive Personal Finance Articles Via RSS!

Additional Articles From - Home | Finance | Personal Finance

Online Banking With Safety In Mind - By : Nicholas Hunt
7 Important Benefits of Preparing Your Personal/Home Budget Using a Spreadsheet - By : B. Hokin
What's All The Fuss Over Bank Charges? - By : Nicholas Hunt
The top 7 overlooked Offshore Foundation Benefits - By : Doug Sitenal
Find Unclaimed Money - Don't Wait Any Longer! - By : John Hague
IR35 - Step 1 in surviving IR35 - By : Antony
How to Improve Credit History Fast - By : Mark Lauber
Retirement Planning With Financial Articles - By : Darren Callea
I live in one of the wealthiest countries on Earth, so why aren’t I rich? - By : JimBoSS
Top 5 ways To Improve Your Credit - By : Arthor Pens

	Print This Article
	Post Comment
	Add To Favorites
	Email to Friends
	Ezine Ready

Submit Articles
Member Login
Top Authors
Most Popular Articles
Submission Guidelines
Ezine Notifications
Article RSS Feeds

About Us
Submit Link
Contact Us
Privacy Policy
Terms of Service