Reports Indicate Independent Businesses Could Profit From Factoring

Back in the year 2006 the National Federation of Independent Business – NFIB – and their Research Foundation had data stating 90 percent of business owners who wanted credit were able to get it.  Today, a recent survey from NFIB’s research division said the demand for small-business credit in 2010 continued to remain weak. Although it was up 7 percentage points from 2009, 52 percent said they did not try to borrow in 2010. This is yet one more reason why small businesses today are finding that alternative financing like factoring better suits their financial needs.

The report said, “The change in momentum from constantly increasing competition and access to credit to an abrupt freeze, if not direction reversal, is tied to the current confusion exhibited by many owners and analysts when assessing small-business credit conditions.”

Lack of sales is worse than lack of access to credit, and until economic growth starts happening again, businesses will need to look to other strategies such as invoice factoring, to sustain and grow. Factoring enables a company to receive cash in as little as 24 hours for outstanding invoices that otherwise may not be paid for 30/60 or 90 days. 

In another report, the economy generated only 36,000 net new jobs, our unemployment rate dropped sharply in January 2011 down to nine percent which is actually the lowest level in about two years.  While many other economic indicators point to a strengthening economic recovery, this report proves how job growth remains the weakness of pour economy right now.

And finally, a survey done by CareerBuilder.com stated most small businesses aren’t planning to make any changes to their headcounts in 2011.  They recently polled more than 1,350 firms with fewer than 500 employees finding that 64 percent of the hiring managers interviewed said they plan to keep their staff levels as it is in 2011.  Only 21 percent of them reported plans to add full-time employees. Six percent said they expect to make layoffs and nine percent are still undecided.

This is just all the more reason for small businesses to think carefully about this year’s financial strategies such as factoring, to sustain and grow. Each and every small business is different and has unique needs, so there is rarely one solution that works for everyone, but invoice factoring is one financial strategy that does seem to work for everyone.

In choosing the right working capital finance model for your business, there are many factors to take into account. One consideration is how far out your customers pay their invoices.  If it is 60 to 90 days from the date of invoicing, then invoice factoring could be a great tactic. You will get paid within 24 to 48 hours, and then can use those funds to buy supplies, do more business. Smart business owners read the latest business and economic reports, watch trends, and they always figure out ways to beat the odds, including the use of alternative financial tactics like factoring.

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