	Article Directory		Article Submission Service		Article Marketing Blog		Publishers		Member Log In

Article Directory :: Business - General Articles

Financial Tips: Factoring for Small Businesses

By Kristin Gabriel

Republish: EasyPublish™
Published: 17Dec2008
Word count: 529
Viewed: 299 time(s)

Get Free Content For Your Site

As many people know, owning and operating a successful small business means keeping accurate and timely financial records. Why? Because your financial picture allows you to monitor your small business and determine its successes every month. Good record keeping also provides you with the information you need to evaluate the financial decisions that you've made.

One thing many small business owners think is that they have to hire an outside accountant to run the business. This is not necessarily ture. Consider the fact that you could save money if you or someone in your company or family were to keep the books, rather than a costly outside accountant. An accurate set of financial records in-house will minimize costs of paying an accountant and enable you to have more control of your business finances.

For example, what if your clients are late paying you one month, and you need more money to pay bills? Then you would know right away that you might consider factoring, a solution that could provide funds in about 24 hours. Accounts receivable factoring has been around for about 4,000 years, but single invoice factoring is a great new way to provide short-term working capital to a small business.

As you may not always get paid right away for a product or service that you have already delivered, factoring could be the answer. Today it is harder than ever before to secure alternative financing through banks or venture capitalists. Accounts receivable factoring, also known as spot factoring, is a fast way to turn your receivables into cash rather than waiting up to 90 days for an invoice to be paid.

It works like this. Factoring companies look at your customers' credit rather than yours and can pay what's owed to you within about 24 hours. Fees for this service vary. The factoring company will collect the funds from your client in the end.

Other financial considerations for small businesses include the fact that it is important to keep all your records like canceled checks and other business documents in an orderly fashion and in a safe place. Put your receipts in the proper categories throughout the year so it will be easier to total them as tax time approaches.

Small businesses aren't required to keep a formal set of books, but make sure you choose the best record keeping system. Here are a few more tips:

- Employee compensation records -- make sure you keep tabs on what you pay your employees and when raises, bonuses or commission checks are due.
- Monthly expense summary -- keep records of your monthly business expenses.
- Bank statements -- when you receive your statements every month, be sure to prepare a bank reconciliation document to help you balance your checkbook.
- Summary of receipts -- keep a record of gross income that is totaled daily, weekly or monthly, and keep track of where the funds came from.
- Disbursements record -- this is a check register or expense journal that shows payments of bills where you record all the transactions in which you paid out cash or checks.
- Asset purchases -- keep a listing for equipment, vehicles, or real estate that is used in your business.

Kristin Gabriel is a writer who works with The Interface Financial Group (IFG), North America's largest alternative funding source for small business. The company provides short-term financial resources including invoice factoring, serving clients in more than 30 industries in the United States, Canada, Australia and New Zealand. IFG offers expertise in accounting, finance, law, marketing and banking. Visit ifgnetwork.com for information about accounts receivable factoring.

EasyPublish™ this article - publishers click here