Accounts Receivable Factoring Business in the White House

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Written by Wade Henderson

Friday, 20 March 2009 18:43

Once again the US Government is making ground breaking advances in taking every measure available to get the economy back on track.

by WadeHenderson

Once again the US Government is making ground breaking advances in taking every measure available to get the economy back on track.

NY Times (03/19/2009):

DETROIT " The Obama administration moved on Thursday to stabilize the American auto industry by creating a $5 billion fund to support troubled parts suppliers.

The program will provide supply companies with much-needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need, the Treasury announcement said.

So what does this mean for the industry? Until the details are rolled out is hard to say specifically, but the announcement to get into the Accounts Receivable Factoring business is the latest installment of how far the US Government will go to get the economy back on track.

A few days ago I stated that Accounts Receivable Factoring is going to be a major part of the new economy and this turns out to be right on track, but a little sooner than I expected.

For those of you that are not familiar with Accounts Receivable Factoring it is essentially a Line of Credit for Businesses that use the Invoices that are outstanding as security for the advances received by the company which generated the Invoices.

Most Factoring facilities will advance from 80% up to 90% of the outstanding invoice face value. The cash injection can be used for what ever the company needs the money for " payroll, supplies, inventorywhatever. Once the end customer pays the invoice then the reserve will be paid to the company that factored the invoice less the finance fee.

Most Factoring facilities will charge from 2% to 4% per month depending on the industry, credit rating of the customer and the advance rate,

Purchase Order Finance is a compliment to AR Factoring for companies that need a little more financing. This will allow companies to borrow against orders to be filled. With this financing, there are strict guidelines to follow as companies that are in the manufacturing sector often can not use this finance option.

Purchase Order Finance is not intended for companies that buy raw material and then process or manufacture it. If you are interested in the possibilities for this type of financing for your company, be sure to speak to a Commercial Finance Broker as they will have the best knowledge as to which lender would be best for your circumstance.

Best of all, most Professional Commercial Finance Brokers will be paid by the lender so you are not normally required to pay them for their servicesso it really is in your best interest to consult with them.

About the Author:

Before you start looking for your Commercial Financing be sure to find qualified Commercial Financing Specialists. Whether you need Accounts Receivable Factoring, Purchase Order Finance, Equipment Loan, a Commercial Mortgage or a Business Line of Credit check here first.