Anybody have any experience or advice about receivables factoring?
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Receivables factoring
- Thread starter 1911gobang
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Have never done it myself, but I have a customer that did, and regretted it soon after. He was bound to the contract for awhile, and could not wait to get out of it! Can't tell you much else.
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Personally, I give my customers a discount for early pay. Most customers are net 30. I offer a 2% discount for payment within 10 days. I also take credit cards and bank transfers. It takes less than a factoring company would take, and there are a few that take advantage. I also take a deposit on anything that will need a substantial amount of parts. I own a service based company. Sorry for the double reply. Hitting send the first time was an accident.
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I have an agreement with my clients, I send you an electronic invoice on the last working day of the month and I expect payment not later than the 2nd, 3rd if it falls on a weekend...... Works for me....
It times makes sense for a small business with a large number of small receivables, but for a business with a few large accounts and balances, better to do a secured loan.
Remember, when you factor you are still on the hook for uncollected items.
Remember, when you factor you are still on the hook for uncollected items.
QuietMan5150
Member
Are you trying to bridge a gap in cash flow? Have you looked at a business line of credit?
OP
Yeah, I think I’ll just tough it out. I need to buy a skid steer or a telehandler pretty soon. I’ll just rent one for a couple months.
I’ve got the capital to buy one right now, but I think the wise move is definitely to wait....
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I’ve got the capital to buy one right now, but I think the wise move is definitely to wait....
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I understand your stance on credit but as the folks mentioned here business line of credit would be the way the go.
QuietMan5150
Member
tying up capital may put you in a pinch down the road if something unexpected comes up. Since it equipment your business needs, talk to your bank about a secured term loan. By securing the loan with the equipment you can drive the rate down.
I’m a business banker. Feel free to message me if I can help answer any questions.
Lots of good options for equipment financing. Also don’t forget that if it’s a good year financially you can get a big cashflow benefit from accelerated depreciation.
That said, transport costs are high and you might do better leasing what you need when and where you need it.
That said, transport costs are high and you might do better leasing what you need when and where you need it.
Have you met Allan? He just picks the skidsteer up and carries it on his back.
OP