Many times, the only valuable asset businesses can leverage are receivables. Factoring becomes a valuable resource for businesses when selling receivables is their best option for obtaining cash. When a factoring company is able to assist a business, the following positive things occur:
The business gets the cash today to meet payroll, pay bills, pay taxes, and take care of other obligations.
The business is not paying more than they would with 2-net-10 terms, which they are usually willing to give anyway to customers.
The business doesn't run the risk of customers taking the 2% discount and still taking 30 or more days to pay, which happens.
The business is not paying more than if they accepted credit cards instead of extending credit.
