Why Accounts Receivable
Factoring is Necessary
"A sale is not a sale until you collect the money"
Are you a part -time
banker for your customers?
Take a look at your accounts receivable aging
schedule and count the number of accounts over 30 days.Congratulations,
you are extending credit to those customers.You are not getting
paid for
delivering your end of the deal
in a timely manner and as a result
you
are providing the use of your
money to your customer for
free.
Not exactly the
business you thought
you were getting into, is it?
Ask yourself this
question:
If those customers of yours went
to a bank, borrowed the same
amount of time, would they expect to pay a substantial amount of
interest for the privilege?
Of course they would!
And consider this: Not
only are
you receiving no interest on that money,
but most
importantly,you are also losing the use of that money while you
are
waiting for your customer to pay you.
What is the cost of not having
this
money available? In essence, your customers are asking you to
finance their business by extending terms and allowing them to pay in 30
days (and usually longer, right?).
But what is it costing you in "missed
opportunities" when your money is tied up in your accounts receivable?