Credit Card Factoring For Better Cash Flow

Credit Card Factoring for Better Cash Flow

by

Allan Michael Taylor

Due to turbulent financial conditions, an aggressive and creative approach to business financing is increasingly called for and business cash advances are being considered by many business owners in this challenging climate. These options are by no means perfect and problem-free, but pragmatic commercial borrowers seem to understand that commercial financing choices have shrunk dramatically in recent months.

Merchant cash advances are known by a variety of other names, and these commonly include credit card factoring and working capital advances. Regardless of the different titles, the business financing approach is the same. Based on recent credit card processing volume, a fixed amount of cash is given to the business owner. The business cash advance is then paid back to the lender by allocating a portion of future credit card processing transactions toward repayment. Because of ongoing turbulent conditions in banking and financial markets, business cash advance programs have become one of two working capital management solutions that are both practical and effective. Credit card receivables factoring will not be a practical choice for all commercial financing needs regardless of its overall effectiveness. A basic requirement to use this commercial financing option is that a business accepts credit cards for purchases from their business. Even if they accept credit cards, some businesses such as gas stations will not always be able to obtain a merchant cash advance because of low profit margins on each purchase. It is worth repeating that credit card financing can involve several problems (at least ten according to one credible source). Business owners should educate themselves about potential difficulties and then take prudent steps to avoid such problems. For example, some merchant cash advance programs are limited to a maximum amount of $10,000 to $50,000. For a second example, small business owners should avoid requirements for collateral when seeking credit card receivables financing. A third credit card factoring problem to anticipate and avoid is an up-front fee requirement. As a final example of the ten problems to avoid with business cash advance programs, there should not be a fixed monthly payment to repay working capital advances. Borrowers should not overlook the possibility of securing business financing by other means. One way of securing a better perspective about realistic commercial finance options is to have a comprehensive discussion with a working capital financing expert who understands all of the practical business loan options available to a specific business. Even though qualified experts are notoriously hard to find, it is likely that they will be proficient about all business funding choices and not just business cash advances.

Stephen Bush and AEX Commercial Financing Group provide

working capital loans

and

commercial loans

for small business owners. Steve specializes in commercial mortgages, SBA loans and

merchant cash advances

.

Article Source:

ArticleRich.com