Accounts Receivable Factoring Myths Debunked
Now more than ever, accounts receivable factoring is an excellent business financing solution for many companies in search of a stable and flexible source of working capital. But unfounded myths continue to circulate that cast business factoring in an unfavorable light to the detriment of business owners and entrepreneurs who let this fiction get in the way of taking advantage of the many benefits receivables factoring provides.
May 11, 2011 - Fredericksburg, VA - (http://www.smart-business-financing.com) Business success is the direct result of the many decisions, and those decisions hinge on the quality of information that guides them. Decisions made about business financing are about as important as any an owner or manager will ever make, so it is essential that they be guided by the facts.
According to Mike Lieber, business financing veteran and Smart-Business-Financing.Com contributor, business owners constantly parrot the same half-dozen or so objections to business factoring, all of which circulate widely on the internet and in other media.
"I thought it was about time to counter some of these fallacies with reality," he said.
Several of the more common misconceptions and Lieber's rebuttals are found below. The full article, "Accounts Receivable Factoring: Separating Fact From Fiction" is available at Smart-Business-Financing.com.
Fiction: Accounts receivable factoring is an expensive business financing option.
Fact: A common mistake many business owners make in evaluating receivables factoring is attempting to equate factoring fees with interest rates on loans. Business factoring fees are not equivalent to annualized interest rates on loans. For example, if a factoring company charges a staffing agency owner 3% per month, it cannot simply be translated into 36% APR. Rather, a factoring firm's fees stop the day an invoice is paid. Staffing firms do not typically wait 12 months to receive payment on an invoice, so the fee is not nearly as large as one would perceive it to be.
Fiction: My firm's business model is too complicated for factoring companies to understand.
Fact: Accounts receivable factoring has been in existence for centuries. Factoring companies are now working in nearly every conceivable industry throughout the world. Chances are that you will find multiple factoring companies that are familiar with the nuances and intricacies involved with your business regardless of how unusual you think it is. As a result of their long history and accumulated expertise, factoring companies are quite sophisticated and many have specialized funding programs specifically geared towards certain industries.
Fiction: My customers will think my company has financial problems.
Fact: This outmoded perception has been discredited by the widespread acceptance of accounts receivable factoring as a prudent financial management technique. Healthy businesses - including quite a few in the Fortune 500 - looking for every possible competitive edge, now use receivables factoring to strengthen their financial position, which puts them in a better position to serve their customers. In short, given this explanation, most businesses will view your decision to factor receivables not as evidence of weakness but rather as shrewd financial management.
About AEGIS Financial Solutions, Inc.: Since 1998, AEGIS Financial Solutions, Inc. has been helping people solve financial problems and get money when they need it most, using the vast resources of the non-bank cash flow industry.
Press Contact:
Mike Lieber, President
AEGIS Financial Solutions, Inc.
88 E. River Bend Road
Fredericksburg, VA 22407
mjl@aegisone.com
PH: (540) 548-2270
###
May 11, 2011 - Fredericksburg, VA - (http://www.smart-business-financing.com) Business success is the direct result of the many decisions, and those decisions hinge on the quality of information that guides them. Decisions made about business financing are about as important as any an owner or manager will ever make, so it is essential that they be guided by the facts.
According to Mike Lieber, business financing veteran and Smart-Business-Financing.Com contributor, business owners constantly parrot the same half-dozen or so objections to business factoring, all of which circulate widely on the internet and in other media.
"I thought it was about time to counter some of these fallacies with reality," he said.
Several of the more common misconceptions and Lieber's rebuttals are found below. The full article, "Accounts Receivable Factoring: Separating Fact From Fiction" is available at Smart-Business-Financing.com.
Fiction: Accounts receivable factoring is an expensive business financing option.
Fact: A common mistake many business owners make in evaluating receivables factoring is attempting to equate factoring fees with interest rates on loans. Business factoring fees are not equivalent to annualized interest rates on loans. For example, if a factoring company charges a staffing agency owner 3% per month, it cannot simply be translated into 36% APR. Rather, a factoring firm's fees stop the day an invoice is paid. Staffing firms do not typically wait 12 months to receive payment on an invoice, so the fee is not nearly as large as one would perceive it to be.
Fiction: My firm's business model is too complicated for factoring companies to understand.
Fact: Accounts receivable factoring has been in existence for centuries. Factoring companies are now working in nearly every conceivable industry throughout the world. Chances are that you will find multiple factoring companies that are familiar with the nuances and intricacies involved with your business regardless of how unusual you think it is. As a result of their long history and accumulated expertise, factoring companies are quite sophisticated and many have specialized funding programs specifically geared towards certain industries.
Fiction: My customers will think my company has financial problems.
Fact: This outmoded perception has been discredited by the widespread acceptance of accounts receivable factoring as a prudent financial management technique. Healthy businesses - including quite a few in the Fortune 500 - looking for every possible competitive edge, now use receivables factoring to strengthen their financial position, which puts them in a better position to serve their customers. In short, given this explanation, most businesses will view your decision to factor receivables not as evidence of weakness but rather as shrewd financial management.
About AEGIS Financial Solutions, Inc.: Since 1998, AEGIS Financial Solutions, Inc. has been helping people solve financial problems and get money when they need it most, using the vast resources of the non-bank cash flow industry.
Press Contact:
Mike Lieber, President
AEGIS Financial Solutions, Inc.
88 E. River Bend Road
Fredericksburg, VA 22407
mjl@aegisone.com
PH: (540) 548-2270
###
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