Accounts Receivable Factoring – Source of Franchisee Funding
by Lanette Tucker
Factoring, especially accounts receivable factoring, can be the perfect tool
for your franchise; not only can it help your franchise stay afloat and secure
essential funds, but also allow for you to take advantage of opportunities to
expand. Although factoring might not be best for every franchise; it is a
necessary tool for others. Here are some sample scenarios where accounts
receivable financing is the best option a franchisee can have:
Great Tool for New Franchisees
It's hard to start a new franchise; a franchise' ability to secure vital
funds might make or break the company. New franchisees can fail because they
cannot obtain the necessary funding: they cannot secure any funding from banks,
and their other spending options are severely limited.
In order to effectively raise money without increasing debt, franchisees
should sell their accounts receivables. The last thing a new franchisee wants is
more debt, something that would significantly hinder a company's ability to show
a profit, inhibiting their capacity to borrow cash in the future.
Accounts Receivable Factoring Allows Franchisees to Grow Quickly
Franchisees can grow quickly if they correctly utilize invoice factoring:
they can use the money from factoring their invoices to pay for necessary
inventory expansion, or to start a completely new product line or division.
Using accounts receivable factoring, franchisees can easily and quickly obtain
funds, allowing them to re-invest in their franchise, drastically accelerating
Having Cash Flow Problems?
Problems with cash flow can stunt any franchise growth. If your company can't
grow because you are having difficulty collecting on outstanding invoices,
factoring may be just the tool you need, providing necessary money right away,
allowing your company to continue operations and increase revenue.
Hard to Get a Bank Loan?
If your company cannot get a bank loan, factoring is a great alternative.
Franchisees may not be eligible for a loan if they only have a few assets to use
as collateral, or are fairly new and haven't turned a profit. In cases such as
these, factoring will be able to deliver a large percentage of a company's
outstanding invoices, typically from 75 to 90 percent.
Accounts receivable factoring delivers money right away, without having to
qualify for a potentially nasty loan. Because factoring involves selling a
franchise' invoices, they don't have to worry about repaying any bank, avoiding
any further strain from loan repayment, thereby strengthening the company. If
you are a start-up, or are fairly new, and would like to grow your franchise
quickly, factoring is the best option available.
For additional information, contact:
Lanette Tucker Paragon Financial Group 200 SE 9th St., Ft Lauderdale, FL
33316 Phone: 954-524-4840 Fax: 954-524-3533