A business cash advance is a scarcely utilized financial method that gives needed cash to merchants via their credit card processor. Very Few entrepreneurs realize that they have this option and head straight to family or a bank when they need cash to pay for expansions, repairs or upgrades of their stock and equipment. If you are a business in need of capital immediately, you should look into factoring as well.
The concept behind factoring is something like selling futures. You, as the merchant, agree to sell future credit card receivables at a lesser price to the factoring company. The funds is provided now in exchange for anticipated revenues in the next several months.
These arrangements are usually for the short term, rarely more than 1 year, and are a excellent way for a merchant with a proven credit card sales history to attain needed funds.
Unlike a conventional loan, where the repayment term is fixed for the duration of the loan, a factoring agreement takes into consideration the fact that in almost every business there are busy months and tough ones. Your payment is directly tied to your credit card receivables, as a percentage, not a set fee.
If you have decided to pay a ten percent daily capture and you charge $8,000 one month, your payment that month comes out to $800. In the next month you may receive $10,000 and pay 1,000 dollars. This flexibility is a wonderful option for a growing company.
Another benefit of a business cash advance is the quickness,short time in which the working capital turns up in your bank account. While a bank may take several months of deliberation and dictate how you utilize the cash when and if they give it to you, with a factoring arrangement, you will have the money in about a few working days, and you can apply it to whatever you see fit.
The concept behind factoring is something like selling futures. You, as the merchant, agree to sell future credit card receivables at a lesser price to the factoring company. The funds is provided now in exchange for anticipated revenues in the next several months.
These arrangements are usually for the short term, rarely more than 1 year, and are a excellent way for a merchant with a proven credit card sales history to attain needed funds.
Unlike a conventional loan, where the repayment term is fixed for the duration of the loan, a factoring agreement takes into consideration the fact that in almost every business there are busy months and tough ones. Your payment is directly tied to your credit card receivables, as a percentage, not a set fee.
If you have decided to pay a ten percent daily capture and you charge $8,000 one month, your payment that month comes out to $800. In the next month you may receive $10,000 and pay 1,000 dollars. This flexibility is a wonderful option for a growing company.
Another benefit of a business cash advance is the quickness,short time in which the working capital turns up in your bank account. While a bank may take several months of deliberation and dictate how you utilize the cash when and if they give it to you, with a factoring arrangement, you will have the money in about a few working days, and you can apply it to whatever you see fit.
About the Author:
Dating back to early 2008 Daniel Samoohi has helped thousands of business owners in finding reputable providers in order to compare offers for a business cash advance. By making providers compete with each other, Daniel also helps businesses in finding great deals for business cash advance.
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