actoring has been an issue when providing Accounts
practiced for centuries. Receivable Loans or Financing.
The Romans sold promissory The Financial Companies looks at
notes at a discount as did the the credit history of the vendor
Phoenicians. The word “factor” not yours! This is exceptional
comes from Latin, the language of good for small to medium size
Rome. It means “to do” or “to business that have been in
make.” The Pilgrim’s journeys to business for less then two years.
America were financed by advances
from a Factor who provided the
funds to pay for the journey. The My first experience with
Pilgrims repaid the money with Factoring came when one of my Tax
earnings from America. Factoring clients ending up with a sizable
to this day is an extremely Tax liability one year. He ran a
common business practice in small Trucking company and had
Europe whereas many American very few tax problems in the
business men have never heard of pass. However, because of a
it. sudden burst in growth he was
doing 2 to 3 times more business
Factoring is the selling of your in the last half of the year.
accounts receivable for cash Because he did not have
versus waiting 30-60 or 90 days sufficient tax write offs, his
to be paid by your customer. When tax liability really hit hard. He
you provide a Factoring company was actually having serious cash
with copies of your invoices, the flow problems because of
Factoring Company uses your unplanned growth!
invoices to make a loan to your
company. It is a simple process We talked about the situation,
and can be automated after the his taxes were completed and
first transaction. Credit is not because he had rented a couple of
trucks to keep up with the work situation and they paid him 50%
load, we were able to use the of the Invoice immediately and
rental cost as a write off. But the balance shortly after.
there was still the
self-employment tax and there was I had already researched
no doubt he had an increase in “Factoring” or Accounts
business income. Receivable Financing and being a
Tax person I was always looking
I didn’t say anything, but I was for ways to help my clients pay
concerned about his payment for their taxes as soon as possible,
the Tax preparation. I knew he especially if they owed employee
was having cash flow problems and taxes.
the tax bill did not help. Then
he told me about the $30,000 I put an ad online and within
worth of Invoices. Because the days a CPA called. He had a
invoices had not been paid they client who imported culinary
were not included in his income products from overseas. They
for that year so I had no idea needed to factor a fairly large
that he had invoices in that invoice. I called one of the
amount. In fact the invoices Factoring Companies explained the
where scattered over his desk. situation. The Factoring Company
arranged for his company to do a
I went on the Internet and Purchase Order from his supplier
started to research “invoices”. I overseas. Once the Purchase Order
had never really understood was in place, we factored the
Factoring before that time, but I Invoice. The client received over
had heard of it. We did not have 90% of the Invoice amount within
to Factor my client’s Invoices days. He then went on to repeat
because he called the company he the deal 3 or 4 more times!
worked with, explained the
Purchase Order Funding is is very helpful for Business who
slightly harder to get then makes large purchases and resells
Accounts Receivable Financing, to a third party.
however, Purchase Order Funding
About the Author: Cassandra Ingraham operates an Online Tax Resolution and Bookkeeping Service. The small Tax Service specializes in Invoice Lines of Credit up to $10 Million per Invoice. Government, City, State and Corporate Invoices welcomed. More information at: http://www.taxeswilltravel.com
