How Communications Factoring Can Get You The Money You Need Now
A communications factoring company will usually pay most of the total debt amount
, called the advance, in just a few days. Once they have acquired the invoice, they will wait to collect the rest.
Here is an example of how communication factor could work for your business: Another company owes you a debt that is to be paid off in several months. Instead of waiting this long, you could get the majority of the money in a matter of days and have the debt taken off your hands. You will get the remaining balance when the total is actually due, called the rebate. Aside from a small transaction fee, you get the full amount.
Why Would Anybody Want Unpaid Invoices?
It may seem strange that the communications factoring company only gets an unpaid invoice out of the deal, but in reality, the company gets the interest and any fees that accrue if the debtor defaults. While the company takes a risk in buying the invoice, it is with the assumption that it will pay off in the end.
The company pays your business a large sum up front, making an investment in the debt. They give you the rest of the principle later, and they acquire everything else. For them, it is a long-term investment. For you, it is almost immediate funding.
This trend is catching on in the world of telecommunications. For small businesses, especially telecom companies, it is very difficult to get funding in traditional ways. Unless you run a large, established company, banks are not likely to lend to you. They see telecoms as lacking viable assets for collateral, so often they will not loan them money.
Communications factoring gets you the financing you need right away, so you can continue your business. It also can help take debts off your hands. Why wait for invoices to be paid when you can collect on them now?
by: Andrew Stratton
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