Factoring - a solution for growing businesses

Every business needs a steady flow of working capital to achieve growth. On the other hand, businesses need to offer better credit terms to customers to win new customers and protect existing customers from competitors. As a result, the growth of a business comes to a standstill for lack of funds with so many unpaid invoices at hand.

Some businesses resort to costly bank overdrafts. In this scenario, factoring offers a viable alternative and more and more businesses are successfully turning to factoring to satisfy their need of a steady flow of working capital to achieve growth.

The concept in factoring is simple; the factoring company pays cash upfront for receivable invoices of a business, in some instances within as quickly as 24 hours.

With the steady cash flow facilitated by factoring, businesses are able to engage in financial expansion, fund large inventories and payrolls and meet increasing overhead costs no matter how long a period of time a client takes to pay an invoice. In an age where effective cash management has become a must not only for success but also for survival, it's compulsory for any growing business to seriously consider factoring as an effective means of ensuring a steady flow of working capital.

With factoring, companies are able to focus more on expanding rather than going after collections as the factoring company takes care of that.

Factoring also enables companies to offer much better credit terms to customers, which has become so important in today's highly competitive business environment where all competitors try to grab valuable clients away from a business by offering better credit terms.

Factoring also helps to improve credit status of a company, giving it a better standing among lending institutions and other financial establishments.

Lack of knowledge about factoring keeps many businesses away from enjoying its benefits.

In the increasingly competitive business environment of today, a growing business cannot afford to underestimate its importance as competitors may be better financially managed with factoring. The cost of factoring is also much less than the cost of bank overdrafts.

It can be recommended to any business which needs to achieve steady growth with a better financial standing.

In Sri Lanka, Commercial Factors (the factoring and working capital business unit of Commercial Leasing Company Ltd.) has been providing working capital solutions to a large number of small and medium enterprises enabling them to grow to their full potential.