The best source of financing would be your bank or a lending institution. Here you would get the best rates over time. Unfortunately, banks won't lend you any money based on your sweat and certainly won't take your receivables as collateral but will demand sterling credit history and lots of other collateral.
A factor company bridges this gap by purchasing your invoices and advancing you a large percentage, allowing you to get the use of most of the money you already earned right now, regardless of your credit history, collateral or credit rating. It is your skills, experience, and relationship with your customer and the veracity of the receivable that matters.
Contractors factor when they have no other source of credit (and honestly, almost nobody does) but suddenly are presented with an opportunity for a lage contract and now need to expand, meet additional payroll, and pay larger operating bills.
Most major contracts come from Cable and Telecom companies that take 30 to 60 days to pay out. Contractors turn to factoring as a temporary necessity associated with a growing company. With a factoring option, a highly skilled person no longer needs to turn down opportunities to grow in business simply because they do not have the money to meet the increased payroll and expenses associated with success.
Why spend years building a solid reputation and then never be able to reap the rewards beyond an indiviudal contributor?
Re: 30 Days Out
Member #: 22668
Registered: 3/29/2003
Posted:
107
Name:
Frank Anderson
Name:
Frank Anderson
Company:
Innovative Marketing Systems
Occupation:
CFO
Location:
Dallas, TX
There is 1 reply to this message
