Using Invoice Discounting For Cash Flow Georgia

Invoice discounting is basically the same as invoice factoring: it involves selling your invoices that are not yet due to be paid to a company at a discount.

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Perpetual Funding Group
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Presidential Financial
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1979 Lakeside Pkwy Ste 400
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The advantages of using invoice discounting for cash flow are as follows:

Meet emergency expenses

Pay suppliers early to take advantage of early-payment discounts

Take on time-sensitive new projects

Expand your business more quickly

Pay for costly advertising that will bring in more sales

Beef up your business prior to crucial time points

Invoice discounting involves finding a company that will purchase your accounts payable at a discount that depends on the length of your payment window. The discount generally ranges from about 1.5% to 5% for every ten days until payment is due, with the lower discount percentages going to the most creditworthy of the companies that owe you money. Your company's creditworthiness has no bearing on this sale. And with invoice discounting, you can sell part or all of any reasonably creditworthy debt.

You can either sell your invoices on a notification basis which means the company that purchases your invoice also collects on it or you can work out terms with the company purchasing your invoices on a self-collect. The difference is when it's a notification sale, your debtors will pay the invoice discounting company directly. If you collect debts yourself and then forward to the invoice discounting company, your customers will never know that you sold their invoices to another company. It is easier to sell invoices on a notification basis because the invoice discounting company knows, this way they will get their money back in a timely fashion.

The main advantage of selling invoices on a notification basis is that the factor, or invoice discounting company, is then responsible for collecting the debt and assumes all the credit risk. The factor is often a broker, not the company purchasing your invoices. Using invoice discounting on a regular basis to fund your company can eliminate the need for staffing a credit and collection department, which equals another saving for you.

Other Ways to Use Invoice Discounting

If you establish an ongoing relationship with an invoice discounting company, you can even establish the equivalent of a line of credit based on your invoices. Instead of using all the funds forwarded to you in payment for your invoice, you take what you need and leave the rest with the invoice discounting company. The discounting company allows your account to accrue interest, and you can draw on the account as you need cash.

If you're not ready to sell invoices outright, you can try using accounts receivable as collateral for a loan. This involves getting a bank to accept both your credit and your debtors' credit, and then collecting cash equal to at least half and up to ninety percent of your accounts receivable. This is a little cheaper than invoice discounting, but it can also be both slower and less flexible.

About the Author:

Henry Byers, Retired Accountant and Invoice Discounting advisor at eCPA Group LLC ( http://www.invoice-discounting-factoring.info ) publishes other articles related to Invoice Discounting at http://www.factoring-and-invoice-discounting.info and http://www.invoice-factoring-hq.com.


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Featured Local Company

AdvanceMe, Inc.

1.888.700.8181
600 Townpark Lane
Kennesaw, GA
www.advanceme.com

COMPANY OVERVIEW

AdvanceMe, Inc. is the nation’s leading and most-trusted provider of alternative funding and financial services to small-and medium-size businesses. We help to power the growth of these businesses with working capital. Thousands of businesses use AMI financial services as an alternative to small-business loans.

AMI has funded over 18,000 transactions and over 100 franchise concepts and has provided nearly $380 million of working capital since its inception in 1998. AMI invented the alternative funding category and continues to lead it with innovative financial services for businesses.

Our objective is to provide the necessary working capital to help these businesses manage their cycles and existing cash flow and to provide them with carefully timed funding to assure their continued growth.

Located in metro Atlanta, Georgia, AMI has a nationwide sales and customer care staff supporting nearly 10,000 businesses. Founded in 1998 with $9 million in revenue, we have experienced double-digit profit and revenue growth, and are poised to exceed our aggressive target of $265 million by year-end 2005.

AMI's fundamental strengths define our unique position as the capital provider of choice for smart business people around the country.

OUR MARKETPLACE

There are nearly six million small businesses in the United States, each one reflecting the hard work and dedication of its owner. According to the Small Business Association (SBA), “Inadequate or ill-timed financing is a major reason for small business-failure.” Our objective is to provide the necessary working capital to help these businesses manage their cycles and existing cash flow and to provide them with carefully timed funding to assure their continued growth.

OUR STAFF

The AdvanceMe, Inc. sales and customer-care staff are among the most dedicated people in the financial services industry today. These highly trained professionals are frequently complimented by our customers for their responsiveness. Our sales staff is trained to understand you and your business and not treat you like a number. In fact, many of our sales people come from the same industry they sell to, thus providing a more personal and consultative relationship.

OUR SYSTEMS

AdvanceMe, Inc.'s technology-based systems are a benchmark in the financial services industry and the backbone of the company. These systems provide fast, reliable and accurate methods by which businesses can apply and qualify for working capital and an innovative method by which the money is repaid.

A simple “swipe” of a customer’s credit card keeps your working capital advance up to date. Since the rate at which we collect our money is determined by a realistic evaluation of your company's prior monthly credit card receipts, the collection process is both predictable and easy. Our unique credit scoring sy

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