If you are a new business owner or you are thinking of starting your own business, an important business resource every start-up company should know about is factoring. Learn how small business factoring can offer you the immediate cash that you need to grow your business.

Limited resources and cash flow problems can hinder growth, and many times these two obstacles cause many small businesses to fail. Small business factoring offers a great alternative to traditional bank loans because there are no set terms, no required monthly payments and no high interest rates.

How does it work?

If your company sells products or services to customers and offers terms of 30 days, 60 days or 90 days, you could be eligible for small business factoring. Also known as accounts receivable factoring or accounts receivable financing, it works by selling your invoices and accounts receivable to a factoring company. Depending on the company that you work with, you could receive up to 96% of the face amount of the invoice in cash, and the company then assumes the responsibility of collecting the invoice, and assumes 100% of the credit risk.

Depending on the financing company that your business uses, you could be approved in as little as 24 hours, and receive your cash in just a few days or a week. In general, it's a very easy process that moves much faster than any bank or other type of traditional lender. The application process is usually very simple, and in most situations there is little to no red tape to deal with.

What can you do with factoring?

The possibilities are endless with this type of financing. Unlike a traditional bank loan in which you must put the money towards a specific use, the cash you receive is completely yours to do with as you please. With your freed up cash flow from accounts receivable financing, you can:

- Maintain payroll
- Purchase new equipment for your business
- Purchase new and improved inventory or seasonal merchandise
- Pay off existing debt or taxes
- Expand or remodel your store or office
- Put more money towards marketing or advertising efforts
- Simply keep the cash in an emergency fund in case unexpected expenses arise

What kind of companies can use factoring?

As mentioned before, any kind of company that sells products or services to customers and offers terms of 30 days, 60 days or 90 days is eligible. Some factoring companies specialize in providing funds to specific types of companies, while other companies provide factoring to all kinds of companies. Some of the many industries that use accounts receivable financing services on a regular basis include freight shipping companies, construction, medical, dental and other healthcare offices, apparel, agriculture and produce, security guard staffing agencies, cable installers, janitorial and maintenance companies, and more.

Every business or company (regardless of whether they're a small business or large corporation) has experienced cash flow difficulties at one point or another. If you need cash for your small business fast, factoring could be the best solution for your growing business needs. Take your small business or company to the next level with this flexible and easy method of financing today.