Tag Archives: debt
Invoice Factoring Can Save Your Business
Invoice factoring is the basic practice of selling invoices to financial factoring companies for the purpose of receiving money right away. Smaller companies often fall into the financial trap of not having available resources and therefore sell their invoices to financial agencies in order to gain working capital. This practice does not require the business to swallow more debt and in fact operates in an opposite manner. Small businesses that don’t utilize the financial tool of accounts receivable factoring acquire more debt by waiting for the accounts receivables to be paid.
Invoice factoring is typically used as a measure to avoid falling further into debt. Without this effective financial management tool many businesses have to adopt more loans or alternatively, put up more collateral for existing loans. Invoice factoring is available at a minimal fee, which makes it an attractive substitute to assuming more debt. In fact, accounts receivable factoring fees are usually set up by way of discount and these rates differ from individual company to company. The great advantage to this type of liquidation is that there are no interest fees to pay and the result is most often better profit margins.
There are many financial companies that offer invoice factoring services. The individual agencies will set up a company with the right set of accounts receivable factoring parameters. After the professionals from the invoice factoring agency assess the individual situation, they will set up the receivables to be factored and proceed accordingly.
Financial agencies that offer accounts receivable factoring are located worldwide and support every industry under the sun. Even truck drivers can sell their invoices to an invoice factoring financial service to free up capital fast. One of the most attractive aspects to an accounts receivable factoring agency is that they customize the service to each business’s individual requirements.
There are as many different types of invoice factoring agencies, as they are rates for factoring invoices. Some purchase the invoices no matter what the receivable total is and some accounts receivable factoring agencies will only liquidate invoices that accumulate more than $100, 000. Generally the higher the invoice factoring total is, the lower the rates will be to take advantage of this financial escape. In cases where the total is in excess of a hundred thousand, a solid accounts receivable factoring agency will offer rates that can be as low as two per cent!
There are many different types of invoice factoring agencies. For example, some agencies will only serve those businesses in the medical profession while others only serve purchase order factoring. There are some accounts receivable factoring agencies that are specifically designed to cater to small business and offer many great advantages that a larger agency wouldn’t necessarily offer. Despite the type of invoice factoring agency that is required for every individual business need, accounts receivable factoring typically happens within a 24 hour time period.
Facts About Payday Loans And Credit Score
Everybody knows that payday loans and cash advance loans are probably two of the few financial products that do not require credit verifications to qualify for them. Though credit has little to do with the qualification process of payday loans and cash advance loans, there are still interactions between these loan products and your credit score and history. It is very important to know them if you are interested in keeping a healthy financial life.
These interactions may have nothing to do with approval but have implications on the qualification process of other financial products like credit cards, personal loans and even secured loans like home mortgage loans or home equity loans. So, as you can see, it is important for you to know them because your future financial life can depend on the use you give to these loans and their relation with your credit score.
Positive Interaction For Raising Credit Score
It may sound strange but even though payday loans are meant only for an emergency situation, they can be a great tool for recovering your credit if used properly. Since most of the lenders that provide this kind of loans report to all major credit bureaus, it is possible to obtain one of these loans that do not require credit checks and take advantage of the fact that the lenders report to credit bureaus to get positive inputs on your credit history.
Even though the approval of the loan will not have implications on your credit report because no credit checks are made, the timely repayment of the loan will be recorded into your credit history and thus, a positive entry will be added to your credit report. However, bear in mind that payday loans do not have long repayment programs and thus, a single or two entries will be reported during the repayment of a payday loan. Personal loans with longer repayment programs are far better for this purpose, however, you may need to request a few payday loans before you can get approved for a personal loan if your credit score is not that good.
Negative Effects On Credit Score
There are some reasons why payday loans can affect credit score negatively. The mere fact of getting a payday loan will not affect your credit score but if debt keeps accumulating it will affect your debt to income ratio which will, in turn, affect your credit negatively. Thus, you should avoid using payday loans as a common source of financing because that is the main reason why debt accumulates: people fail to raise the money to repay a loan and so, they take another loan to repay the previous one.
Also, payday loan lenders report to credit bureaus, as explained above, and if the timely repayment of the loan gets recorded into your credit report as a positive entry, the lack of payment, or late payment will also be recorded into your credit report but it will affect your credit score negatively. As you can see, just applying for a payday loan will not affect your credit but what you do with it and how you repay it can have either positive or negative effects. Thus, be careful.