Monday, February 6, 2023
booked.net

No products in the cart.

  • About
    • Contributors
    • Disclaimers
    • Terms & Conditions
    • Giving back
    • Mission Statement
    • Past Issues
    • Where to Find
    • Call us at 613-935-3763
  • Advertise With Us!
 
 
  • Home
  • News
  • Opinions
  • Lifestyle
  • Events
  • Columnists
  • Videos
No Result
View All Result
No Result
View All Result

Important Things You Need to Know About Financial Factoring

The Seeker by The Seeker
May 16, 2019
in You May Also Like
Reading Time: 3 mins read
4
SHARES
19
VIEWS

With a lot of small businesses facing cash flow problems these days, it’s only ironic to find out that many business owners are not familiar with financial factoring or factoring receivables, which was developed 4,000 years ago. Factoring shares some similarities with debt settlement and other financial processes that close the gaps between cash flows. It’s very important for small businesses that are encountering a sudden increase and demand and need to match it by supplying more as soon as possible. It can go by invoice factoring or just factoring; it’s a very important tool that can help save a business from going underwater.

We’ll be giving you a brief encapsulation of the most important pieces of information regarding financial factoring that may prove to be beneficial.

You might also like

6 Relationship Problems and How to Solve Them

How To Manage On The Stock Market As A Starter

Ways to borrow a loan with Bad Credit

How it Works

Factoring means selling your unpaid invoices to a third-party that proceeds to provide you with 80-85% of the value of the invoice upfront. That third-party then gets in contact with your customers and proceeds to collect the whole due amount. Once the factoring company gathers the money from your customers, they proceed to provide you with the remaining value of the originally outstanding invoice.

How Factoring Fees are Calculated

There is no such thing as a standard calculated fee all factoring companies abide to, there are hundreds, if not thousands of financial factoring companies, and each may offer different rates for their services. You can learn more about the fees and rates of reputable companies by directly visiting their website. The most common fees are two; processing fees, which are usually around 3% of the invoice amount; factor fee, which is typically 1% of the invoice, deducted per week until the due date.

Recourse and Non-Recourse

Some companies do their own risk assessment and factor in “non-recourse factoring”. This means that they can guarantee that they will pay the invoice even in the case of a non-payment issue popping up. Some companies choose to go with a recourse policy, which means that they have the option to ask you as a client to pay the value of the invoice which hasn’t been paid by a customer to them.

What to Avoid

Before you close a deal with a factoring company, you need to put in your consideration some factors that may affect you negatively. After exceeding an agreed duration of outstanding invoices, the interest can gradually start piling up per day at a rate that could reach 0.13% of the fee. You need to make sure that you carefully familiarize yourself with the factoring company terms and conditions. Try to sort your due dates to know the kind of fees you’ll be paying in worst-case scenarios.

Sifting through thousands of finance factoring companies is no easy job, and if your schedule is tight, it’s an overwhelming task. An educated and careful choice can go a long way in helping you save money and producing a stable cash flow. Look online for social media pages and testimonials that can backup the reputation of the company you are considering. When factoring goes smooth, it enables you to give your business a significant boost.

 

Author

  • The Seeker
    The Seeker

    View all posts

Next Post

10 tips from the Ontario SPCA and Humane Society to keep pets safe this long weekend

 
 
 
 
 
 
 
 
 
 
 
Facebook Twitter Instagram Youtube TikTok
Don't miss anything!

Get notified of all our new news by ringing the bell at the bottom left corner!

Content Safety

HERO

theseeker.ca

Trustworthy

Approved by Sur.ly

2022
The Seeker Newspaper is located at 327 Second Street E., Cornwall, ON K6H 1Y8 -- All rights reserved
The Seeker does not accept responsibility for errors, misprints or inaccuracies published within. The opinions and statements of our columnists are not to be presumed as the statements and opinions of The Seeker, and should not substitute professional or medical advice.
ISSN 2562-1750 (Print)

ISSN 2562-1769 (Online)
No Result
View All Result
  • Home
  • News
  • Opinions
  • Lifestyle
  • Events
  • Columnists
  • Videos

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.