You had mentioned banks earlier. How is having my insurance receivables purchased by a factor more beneficial than receiving a standard bank loan?
This is a great question and one that is asked quite often. The most significant difference and the one that has the greatest impact on the overall dynamics of your organization is that factoring is considered off balance sheet financing whereas a bank loan is considered debt and as such must be carried on your balance sheet. Factoring is simply the discounted sale of an asset of your company, therefore the major difference being there is never any debt incurred so there is never any debt to repay. This is simply not the case with a bank loan as you are required to make a set monthly payment to repay the debt which results in a cash drain on your organization. With factoring as your source of financing you can receive working capital on a weekly basis as each new week generates new insurance receivables for the funding source to purchase, resulting in a very steady and reliable flow of cash.
Related Questions
- The client can factor as little or as often as he or she needs to, depending on working capital requirements. Back to Top Isnt it risky to turn my receivables over to a funding source to collect them?
- You had mentioned banks earlier. How is having my insurance receivables purchased by a factor more beneficial than receiving a standard bank loan?
- Isnt Medical Receivables Funding similar to a bank loan?
