Is factoring considered a short or long term solution to resolving my cash flow issues?
This is another great question and is one that only the business owner can honestly answer. The bottom line is that it could be both depending upon how it is utilized. Factoring provides the obvious benefit of an immediate flow of cash to resolve those issues that require immediate attention. It is slightly more expensive than bank financing however. The end result is that many providers will ultimately end up using a combination of both types of financing. Once their organization has become profitable and well established which will enable them to acquire bank financing at a favorable rate, they will use that money for long term commitments and continue to use factoring to handle those situations that require an immediate need for working capital.
