Properly financing the growth of a business can be challenging. It is inevitable for both new smaller companies and more established larger companies to come to a point where more working capital is required because of previous growth or to assist in new growth. When business financing such as loans and credit are inadequate, when sales on credit or net terms have caused a cash flow shortage, or when new growth requires more available cash on-hand to facilitate it, additional financing is necessary to a company’s survival. The solution for this financing dilemma is through Accounts Receivable Factoring with DSA Factors.
Accounts Receivable Factoring is Really Very Simple
Accounts Receivable Factoring is a financing method used by many businesses. In-effect it is a means of short-term borrowing using outstanding invoices or receivables as collateral. This allows companies of all sizes to obtain the working capital they otherwise might not have been able to receive.
The credit line for the receivables is decided based on the financial strength of the end-customer who will owe the money on the products or services purchased, not by the seller of the receivables.
Account receivables factoring is not a loan, so there are no payments and no debt is incurred.
Any business which generates sales through open credit terms to credit-worthy accounts is eligible for this type of financing.
Each company that buys from you and would like credit terms (you must offer terms to be competitive) is submitted to DSA Factors to determine if they are eligible for financing.
The process is simple:
- A company delivers its goods or provides its services to clients and issues an invoice
- The company then sells its invoice to a factoring company such as DSA Factors, and in exchange the company is given up to 90% of the invoice’s amount in cash within 24 hours
- Then the factoring company handles the collections and gets paid for the invoice when it becomes due. Certainly it is quite common that the bill is paid past the due date, and if you are working with DSA, there is no additional fee to the supplier that sold the invoice to the factor.
Utilizing Account Receivable Factoring with DSA Factors delivers more predictable cash flow to businesses, and since factoring receivables is directly tied to sales, as sales increase and the company grows, the receivables factoring line can quite easily grow right along with it.