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It is very important for a business owner to understand the concept and benefits of cashflow. Cash is the lifeblood of a business that allows it to survive, pay wages, pay suppliers and stay solvent.

Please note that a business can survive for a short time without sales or profits but without cash it will simply have to cease trading. For this reason if a business is short of cash it must seek cash flow help as soon as possible.

Factoring

  • Factoring is an aid to cash flow tool that is used by a variety of businesses,
  • Factoring is not just those who are small or struggling.
  • In the UK many companies use factoring to reduce the overhead of their own accounting department and help with cash flow..
  • Large and well established business use factoring to generate cash, which can be used to expand marketing efforts and increase production.
  • The great point about factoring is that is is more interested in the credit worthiness of the client’s customers and not the client’s business itself.
  • Factoring is appealing to young and rapidly growing companies as it is a great method of cash flow help and enable them to compete with larger more established businesses.
  • Factoring shortens their business cycle because no longer have to be short of cash flow whilst it waits up to 90 days for payment.
  • Factoring puts money cashflow in the bank without the creation of any obligation to pay it back.

There are many situations where factoring can help a business meet its cash flow needs. It provides a continuing source of operating capital without incurring debt, which can result in growth opportunities that dramatically increase the bottom line. Virtually any business can benefit from factoring as part of its overall operating philosophy.