This is a concern of many companies who are considering factoring as a finance strategy. However, establishing a credit line is a positive statement–not a negative statement–to make to your customers. Not all companies qualify for lines of credit.
Selling accounts receivable to generate cash is a finance method used by very large corporations worldwide, with the factoring service provided by the largest banks in the nation. In the past, only large corporations with millions of dollars in receivables per month qualified for factoring. Often factoring companies refused to work with smaller companies or companies with a large number of small invoices. Because factoring is widely known, your customers will view this as a positive ability on your part to secure financing, not as a problem with cash flow.
Financing obtained through the sale of accounts receivable factoring is most often used by a firm to expand and take on larger projects; not merely for cash flow or payroll. Now that this service is available to companies like yours, you can enjoy both the perception and the reality of being a growing company, moving forward.
