<br/> <br/> I've had 11 businesses and still own four of them and in the event you 'd like to find out one of them has an Letter Of Intent to Buy in hand and achieved profitability using FACTORING ONLY and is completely - as in absolutely - debt free. The reason why? They never needed to borrow.<br/><br/> Regarding having used or not used factoring: With three of them and soon to be a fourth I have made use of factoring. Why? You can capitalize the business without borrowing because invoice factoring is not borrowing. FYI: One of those businesses fulfilled orders it could only have imagined completing had it not used receivables factoring. It's the one with the LOI in hand in fact.<br/><br/><br/>Factoring, like it or not, is in fact a front end transaction that capitalizes a company without their having to borrow. It's not complicated and only dates back to the Eqyptians ... and still works. As to it not opening the flood gates? If you have a million dollars in invoices and can not borrow against them nor convert them to cash your business (my businesses were any way until I factored) are dead in the water until you get in some cash. If you have some alternative to that then God Bless you . An invoice is a non-performing asset until you can convert it into cash but I am sure that I'll stand corrected.<br/><br/>QUESTION: If you as a business owner could hire a sales person and they would help you access sales you otherwise could not BUT you had to pay them a 2 % - 3 % - 5 % commission BUT they would boost your business 10 or 20 or 30 % would you employ that person? If you say yes to this then you are endorsing factoring. It's not different than a credit card transaction. The business owner is selling the transaction to a third party to get the payment so how is factoring different from cc transactions?<br/><br/> About the cost of factoring? It looks as if that surrendering 2 % on the front end of a credit card transaction is fine (on a daily basis and using your method in your reply incidentally that calculates annually to 760 % incidentally but we both know that this isn't true now don't we?). Why should a retailer accept cc processing? More business maybe? Bigger sales? And what are they really doing? They are selling the transaction to the credit card company. Yes? No? FYI: I offer that service too ... not rocket science.<br/><br/> Invoice factoring can be be used by a company that is turning away sales and can not grow otherwise and note: The only time that they factor is when they need working capital to fill an order that they would otherwise lose. It's like the sales commission: The only time you pay the salesman is when he sells i.e. it's a sale you either didn't have with the salesman or it's a sale you can't fulfill because your money if shackled in your invoices and you can't get it out.<br/><br/>That said it's pretty simple equation when you can not access liquidity:.<br/>1.) Factor and give up 3 % of the sale OR dismisses the sale and disappoint the customer and lose my profit margin ... 10 %? 20 businessinvoice.org/ %? 30 %?<br/>OR.<br/>2.) Use an Invoice factoring company and surrender 3 % of the sale OR kiss off the sale and disappoint the customer and lose my profit margin ... 10 %? 20 %? 30 %?<br/>OR.<br/>3.) Use a factoring company and give up 3 % OR dismiss the sale and disappoint the customer and lose my profit margin ... 10 %? 20 %? 30 %?<br/><br/>What component of being in business to maximize a profit am I overlooking?<br/><br/> Concerning the 24 % annually(or as above it would be 36 %) let's bear in mind that the owner of the business above got to complete transactions that he or she otherwise wouldn't have had the ability to. Not a lot different than the retailer that get's to close a sale with a customer comes in with their cc is it?<br/><br/>Also please explain this: A bank loans someone money ($100,000) at 9 % annually. A factoring company delivers $100,000 a month at a 2 % discount and carries out this 12 times during a year. Hmmmmnnn ... the bank provided $100K for 9 % BUT the factor in fact delivered $1,200,000 for 24 % so which is the much better offer? The bank? It owns you: Invoices, inventory, equipment, your house and your signature ... the factoring firm has a right to your invoices: End. Which is better?<br/><br/> Likewise: Just what happens with the bank when you need $200,000 and you are only approved for $100K? If you have invoices the invoice factoring company funds you and you make the sales and get the profit ... the bank tells you, "Let's see how you do over the next year and come back" or the infamous reply, "We don't like your collateral and your credit is weak" and the bottom line is that they don't have ability to take the risk or perform the work that a factoring firm does.<br/><br/> BEAR IN MIND: MONEY IS NOT LOANED IN A FACTORING TRANSACTION. If you can not accept or recognize that then there is no sense in conversing anymore on this ...<br/><br/>In closing: To tie in to the last statement that invoice factoring at 2 % monthly in discounted interest costs 24 % in interest margins annually then I'll agree to that but only if it can be recognized that a company that sells product with a 30 % monthly margin herewith makes a 360 % annual profit to which you will yell back "They're not the same thing" and to that you 'd be right: Factoring and borrowing money from a bank ... Are without a doubt not the same thing.