Factoring Gains Traction In Challenging Times
The global factoring market has reached a volume of EUR 2,348 billion (USD 2,897.69 billion) in 2014, which is the highest figure ever recorded.The world factoring total grew by 6.3% with Europe and the Americas being the fastest growing markets. The Americas (+8%) showed strong growth as a region. The U.S. factoring market had a particularly strong increase of 17% from last year to EUR 97.67 billion (USD 119.71 billion).
The current economic environment dictates that invoice factoring companies are in high-demand both internationally and domestically. The ability to help organizations with short-term funds when business owners and entrepreneurs are not able to get loans from other lenders such as banks, has made factoring services a more common and attractive funding alternative.
Companies involved in providing invoice factoring offer business owners account receivables funding so that they can maximize cash flow while minimizing credit risk. Most traditional funding sources tend to make loans only to commercial borrowers who have been in business for about two years and are making profits. They are inclined to favor loans for tangible assets like equipment, machinery, real estate, and the like. This is to ensure that the funding institution stays clear of bad debts and recovers the loan if the borrower defaults.
As small to medium sized businesses struggle to find funding sources, they discover there are numerous benefits of invoice factoring because the cost of money (effective interest rate) is much lower compared to various other forms of short-term financing such as merchant cash advances.
Factoring gives the ability to control your cash flow because you know how much to factor and when to factor it. This gives you quick cash instead of waiting for 30-45 days before receiving the invoice payments.
If this type of financing seems appealing, call us anytime to discuss your situation: 877-545-1311.