We are clearly seeing an uptick in our accounts receivable financing business from companies of all sizes as a result of concern about what's happening with their credit card pricing.
Chicago, IL (PRWEB) November 5, 2009
Small and medium-sized businesses throughout the country are seeing sticker shock from credit card interest rate increases and they are beginning to seek out alternative and more affordable financing sources, including accounts receivable financing, Bibby Financial Services CEO Stewart Chesters said.
"Credit cards have been an important financing source for businesses especially during this period of constrained capital. But some credit card companies are hiking their interest rates in advance of tougher regulations that will hit the industry in February; the result has been especially brutal for small and medium sized businesses that may depend on their credit cards for cash flow coverage while they wait for their invoices to be paid," Chesters said. "We are clearly seeing an uptick in our accounts receivable financing business from companies of all sizes as a result of concern about what's happening with their credit card pricing."
With impending changes in the credit card industry, companies are turning to factoring as a reasonably-priced alternative to fill cash-flow gaps so they can pursue growth opportunities. Here are some differences between the two types of financing:
In accounts receivable financing, as the amount of receivables increases the amount of the advance can increase. But a credit card company can reduce borrowing limits without any warning.
In accounts receivable financing, fees are known in advance and they are straight forward. Credit card fees and prices can increase or be applied more randomly.
In accounts receivable financing factoring is not considered debt; funds can be used to pay-off existing lenders. Credit card financing is debt that can be a non-ending cycle and hurt your credit ratings.
"Small businesses are starting to get notices in the mail about sizable jumps in their credit card interest rates, and the reality is hitting them that this could become a very expensive, unpleasant and ongoing form of borrowing with serious consequences. Factoring has become more attractive as a result, propelling it into the frontlines of financing options," Chesters added. 'Because we advance money against a company's outstanding receivables, we are concerned with the ability of their customers to pay their invoices, rather than our client's own profit and loss statement. It make us more flexible and responsive to our customers as they strive to fulfill their business opportunities."
Bibby Financial Services is a worldwide market leading specialist of business cash flow solutions to small and medium-sized businesses. With offices in 10 North American cities and 27 countries around the world, its product portfolio includes receivables finance, factoring, export finance, purchase order finance, specialist solutions for the staffing and trucking sectors, and is an approved lender for the Export-Import Bank's working capital guaranty delegated authority program. Bibby Financial Services is a subsidiary of The Bibby Line Group, a 202 year-old privately held company based in the United Kingdom. Please visit us at Facebook and for expert advice on small business please visit CEO Stewart Chesters' blog.
For more information please call Lisabeth Weiner a 312.252.7360.