The Deciding Factor
Despite the whispers and reputation, factoring is a viable option for a business that is not able to obtain financing through more traditional means. Why would a company factor? There are many reasons including to secure inventory, purchase equipment, remodel, add staff or to open a new location. An added bonus to factoring is that the factor provides services such as billing, collections, credit monitoring and overall client management. Not having to cover these functions in house or outsource them to a third party saves valuable company resources.
Almost any kind of company can utilize a factor, but typical industries include transportation, staffing, IT, apparel, distribution and manufacturing businesses. Basically, factoring provides quick, easy access to capital without the burden of long term debt. While the cost may be higher than that of a bank, the opportunity cost of NOT availing itself of the funds offered by a factor– not buying that useful piece of equipment, passing up the chance to open a new location, etc, could be significantly higher.
Fora Financial works with factoring companies by ensuring that any line of credit put in place will be fully subordinated with our working capital loan. Fora Financial can step in when a customer may need a dollar amount that is too high or even too low for a factor. We understand that small businesses need flexible working capital to grow and the relationships established between a business and their factors are important.