Friday, December 29, 2006

Factoring Question 5

We are a brand new start-up. Can we factor immediately?

No. You need clients. You need to supply them with goods or services under a fully completed contract. You need to have an invoice under which they are liable to pay. In that order.

For a brand new start-up, initial funding may have to come from the founders, family and friends, a line of credit, or a bank loan.

However, start-ups should talk to factoring companies and present them with a list of serious potential clients who have expressed a written interest in their product. Factoring companies do credit checks on debtors as a matter of course, and where there is an intention to establish a factoring relationship, they will often advise the start-up as to which potential clients may cause delays in paying invoices.

Once invoices are generated, start-ups can factor and the cash will be available within days.

© 2006 Sanjeev Aaron Williams & Cashwerks All Rights Reserved

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