Most businesses need some kind of equipment to operate on a regular basis. Usually, equipment is required for a company to grow and have a successful future. Many times the machinery that a company must have is more expensive than the allowable cash that’s on hand. Instead of losing out because you don’t have a certain piece of the necessary machinery, it’s a good idea to learn how factoring can help you get what you need.

What is Factoring?

Factoring is a means of equipment financing that doesn’t involve loaning money. This process entails selling your accounts receivable to a company or a person. When you’re waiting to receive money from other companies you do business with, a factor can step in and get you the help you need. This factor essentially “buys” your accounts receivable usually for a large percentage of the amount you’re expecting to receive. This money is basically cash you can then use to pay for the equipment that you need.

Why Factoring Is Helpful

The first benefit to using factoring is how quickly you get the money compared to a traditional bank loan. When you are using this method of funding for equipment financing, you won’t have to undergo a credit check. A factor will check the credit history of your customer from your accounts receivable. The value of the equipment you’re purchasing won’t need to be assessed, and instead, the value of the account is the only thing taken into consideration. There is also no fear of going through equipment repossession with this type of financing.

How To Get Equipment With Factoring

You will still need to fill out an application with a dealer when going to purchase equipment. This will help you find exactly the kind of machinery that fits your budget. When you go through a bank to get your equipment financing, many times the items will need to be appraised first, and you may also be restricted to only working with certain dealers. Factoring won’t restrict who you can work with, and you can use the money as soon as it’s received from the factor.

From computers and software to ovens and kitchen equipment, factoring can help you secure the machinery that makes your business run. Using your accounts receivable with a factor can be a much better option than a regular bank loan for business equipment. Get what your business needs in the timeframe that you need it.