New York, NY (PRWEB) March 16, 2005
HJ Ventures is proud to release its second Business Finance article in the "Factoring" expert series -
What every business owner needs to know about factoring?
Factoring is a promising way to stimulate the cash flow of a company. Its growing popularity can be gauged from the statistics that factor finance approximately amount to $70 billion in United States each year. In United Kingdom it represented a total volume of Â£104.4 billion in 2002.
However, before leaping on the factoring (http://www.hjventures.com/factoring/factoring.html) bandwagon it is important for the business owner to know what makes a business suitable for factoring?
- Companies with sales up to and exceeding $250 million per year are and may be factored
- Before making any decision the owner should have a list of his customers and they should be in sufficient number
- No customer should contribute over third of the turnover
- Customers are needed to accept the standard payment terms of the industry.
- Period of credit given to the customers should be reasonable
Following factors make a business unsuitable for factoring:
- When there are too many small invoices (http://www.hjventures.com/factoring/invoice-finance.html)
- Factoring is unsuitable when it is sold to the public. It is only available for sales to commercial customers
- There is a provision for the customers to make part payments
- When there are many disputes and queries
- The business is not reliable, credible and sound in its operations
It is very important for the business owners to have a good understanding of these factors as they will be sharing important financial information of their business and will be in direct contact with the customers too. Earlier factoring was not widely used due to the ignorance of business owners regarding the benefits factoring could bring in to the company. Thus it is important for every business owner to be aware of benefits of factoring before using it in their business.
Our next business finance article in our "Factoring" series will focus on "Comparing factoring to other financing options"
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(C) 2005 HJ Ventures International, Inc.