What is Credit Card Receivables Factoring?
Factoring is the process by which a business sells its accounts receivables at a discount. Many businesses factor their invoices in order to improve cash flow. Factoring is very different from a bank loan in that the creditworthiness of the receivables supercedes the value of the company. In other words, it is much easier to factor invoices from a company like Wal-Mart, then a small mom and pop company. Credit card factoring is very different. Factoring credit card receivables is like taking a cash advance based on your future sales. Credit card receivable factoring is much like a business cash advance loan. Credit card factoring can help a company in many ways. Furthermore, approval is a matter of meeting simple criteria that many businesses can achieve.
There are many circumstances that require many small business owners to start looking for some sort of loan. Businesses need money to operate on a day to day basis. Payrolls need to be met as well as rent and utilities. There are times that money is not instantly available to meet these needs. Bank loans are not always practical for some business owners. Cash flows are up and down and banks expect a payment no matter what. Credit cards are another good way to obtain a fast loan, but again, credit cards also require regular payments. Credit card factoring is different in that the factor collects funds when they are available. Therefore, if your sales go down, the factor will collect an amount based on a lower sales volume. This makes it easier to operate in economic environments, such as the one we are currently experiencing in 2008. The factor will collect more money when sales volumes go up. This is very fair arrangement for both the borrower and the lender.
It is not very difficult to qualify for credit card receivable factoring. Your approval is based on your credit card processing volumes. Most credit card receivables factoring companies require that your business process a minimum of $2500 per month in Visa and/or Mastercard approvals. Most businesses such as small retailers, restaurants, bars and pub and many Internet based business process at least $2500 per month in credit card transactions. 90% to 95% of small business owners will qualify for approval. Bad credit history is not a problem either. Funds are transferred from one day to the next. Electronic banking makes it very efficient and easy for credit card receivables factors to send money to their customers. Furthermore, there are no restrictions placed on what you can do with your cash advance from the credit card receivable factor. Therefore, if you want to use your funds for something other than a business expense, you are more than welcome. This could be a good way to finance your next vacation or even a new wardrobe.
There are many ways these days for small businesses to access funding for whatever use deemed necessary. Small business owners can apply for a loan at a traditional bank or even apply for a business credit card. However, these more traditional types of loan require regular scheduled payments based on the agreement you made with the lender. Credit card receivable factoring allows any small business the ability to obtain a loan based on future credit card sales. If your small business has maintained at least $2500 a month in credit card charges, than you more than likely qualify. Some credit card receivable factoring companies will even qualify you if you have been business for 3 months. Furthermore, repayment is made as credit card receivables are accrued. Should business not be as robust for any reason, your payments will reflect the business downturn. Once business is back to normal, your loan repayment amount will increase. The same goes when business is going gangbusters. Credit card factoring companies offer any small business an alternative means of seeking financing.
Factoring is the process by which a business sells its accounts receivables at a discount. Many businesses factor their invoices in order to improve cash flow. Factoring is very different from a bank loan in that the creditworthiness of the receivables supercedes the value of the company. In other words, it is much easier to factor invoices from a company like Wal-Mart, then a small mom and pop company. Credit card factoring is very different. Factoring credit card receivables is like taking a cash advance based on your future sales. Credit card receivable factoring is much like a business cash advance loan. Credit card factoring can help a company in many ways. Furthermore, approval is a matter of meeting simple criteria that many businesses can achieve.
There are many circumstances that require many small business owners to start looking for some sort of loan. Businesses need money to operate on a day to day basis. Payrolls need to be met as well as rent and utilities. There are times that money is not instantly available to meet these needs. Bank loans are not always practical for some business owners. Cash flows are up and down and banks expect a payment no matter what. Credit cards are another good way to obtain a fast loan, but again, credit cards also require regular payments. Credit card factoring is different in that the factor collects funds when they are available. Therefore, if your sales go down, the factor will collect an amount based on a lower sales volume. This makes it easier to operate in economic environments, such as the one we are currently experiencing in 2008. The factor will collect more money when sales volumes go up. This is very fair arrangement for both the borrower and the lender.
It is not very difficult to qualify for credit card receivable factoring. Your approval is based on your credit card processing volumes. Most credit card receivables factoring companies require that your business process a minimum of $2500 per month in Visa and/or Mastercard approvals. Most businesses such as small retailers, restaurants, bars and pub and many Internet based business process at least $2500 per month in credit card transactions. 90% to 95% of small business owners will qualify for approval. Bad credit history is not a problem either. Funds are transferred from one day to the next. Electronic banking makes it very efficient and easy for credit card receivables factors to send money to their customers. Furthermore, there are no restrictions placed on what you can do with your cash advance from the credit card receivable factor. Therefore, if you want to use your funds for something other than a business expense, you are more than welcome. This could be a good way to finance your next vacation or even a new wardrobe.
There are many ways these days for small businesses to access funding for whatever use deemed necessary. Small business owners can apply for a loan at a traditional bank or even apply for a business credit card. However, these more traditional types of loan require regular scheduled payments based on the agreement you made with the lender. Credit card receivable factoring allows any small business the ability to obtain a loan based on future credit card sales. If your small business has maintained at least $2500 a month in credit card charges, than you more than likely qualify. Some credit card receivable factoring companies will even qualify you if you have been business for 3 months. Furthermore, repayment is made as credit card receivables are accrued. Should business not be as robust for any reason, your payments will reflect the business downturn. Once business is back to normal, your loan repayment amount will increase. The same goes when business is going gangbusters. Credit card factoring companies offer any small business an alternative means of seeking financing.
Labels: Business Credit Card, credit card factoring, credit card receivables factoring, credit card receivables factoring companies, credit card receivables factoring company
Credit Card / Financial news blog post by Todd Holliday at 8:01 PM 