Can Factoring Increase Working Capital?

The main objective of factoring is to increase your working capital.  Factoring services are normally less expensive than maintaining an in-house credit and collection department. Usually, at no cost to the business, the factor will provide extensive credit management and consulting.  In effect, a factoring company may act as an accounts receivable department.  This can minimize recurring cash flow problems and bad debt losses.

The main benefit of receivable factoring is the increase in working capital with availability of cash on a regular basis.  This ultimately improves the profitability of the business, maintains good credit ratings for the business, allows the business to take advantage of discounts for purchases, avoids interest and penalties, funds expansion and growth plans of the business and allows the business to spend more time specializing in its area of business.

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