Many people grew up reading Superman series for fun. Ask yourself, would it be wonderful think of this as a metaphor if your B2B business was faster than a speedboat, more powerful than a locomotive and able to skip high rise buildings on a single border? Would your business benefit if you can always get money from your invoices when you need it? Would your business benefit benefit if cash available for growth was virtually unlimited? Would your business benefit if you could overcome your cash flow issues to provide more products or services to your customers?
In general, the larger your customers, the slower they pay your invoices. Its like the old joke, Question: Where is a gorilla? Answer: Anyone wants it. For example, a small audio technology company was engaged to provide sound effects for a major film production studio. When asked to comment on his experience of working with such a prestigious client, the owner said: save your ears.
It is simply a universal trend that your biggest customers may be slower to pay you. Do you have to wait 60 to 90 days to pay off your biggest commercial or public customers? If so, customer debt financing can be the answer to your cash flow issues.
There are several benefits of customer debt financing compared to regular bank financing. Your current credit or corporate credit is not a problem because the finance unit is dependent on your customers credit rating. In fact, some companies that are part of the Banks special assets which is a euphemism for being asked to leave the bank are the main candidates for debt collection. At the other extreme, some companies are in a chapter 11 bankruptcy proceedings called debtors in the Company may receive credit financing with bankruptcy law from bankruptcy law.
Customer debt financing will increase when it comes to your credit limit when your business grows. So if you are with the right commercial finance company, your growth is potentially unlimited. Compare this to regular bank financing that looks at your current situation and your last two year operating history.
Many entrepreneurs are optimistic, energetic and very positive in their predictions about their future. Bank analysts are trained to look at worst case scenarios. Each bank must undergo a periodic safety and health exam. Part of this process is a team of federal supervisors who guess every credit decision in which the bank has granted credit.
Theres a lot of truth to the old saying that the banks will only lend money to people who do not need it. Banks do not want to suffer from the sanctions that may be imposed by the federal regulatory authorities if they found themselves to have made a bad loan. So standards and perspectives for banks and commercial finance companies are very different.
Customer Loans can give you the money you need within a day or two of your billing by your customer. Some commercial finance companies have very sophisticated internet based submission systems. You send the invoice electronically, it is verified and verified and the agreed cash advance is connected to you the same day. Other companies use a paper fax based system but the results are very similar.
Customer finance terminology can be confusing. The following words have essentially the same meaning: customer debt financing, factoring, claims factoring, invoice invoices, discounted factoring, asset based lending are usually associated with very large transactions.