Accounts Receivable Factoring and Health Care

Research released in 2009 U.S. Public Interest Group (USPIRG) showed that 17% of small businesses currently don’t offer health coverage because of the red tape and high costs. What small businesses don’t realize is that successful health plans could generate remarkable benefits for them. The research also found out that 78% of those small businesses who don’t offer health coverage would like to offer it to employees. Accounts receivable factoring for small business can convert payments on terms to COD, helping small businesses in their effort to pay for health care costs for employees. Here’s how accounts receivable factoring could help small business owners with being able to afford health care coverage for their employees.

Normally, small businesses do not get paid until 30, 60, 90 days; but if they can turn these invoices into immediate cash through invoice factoring, then these can cover for health care costs.

The study also showed that small business owners who do make the sacrifices needed to provide health care think that it’s a smart business approach to increase employee productivity.

Since factors do not expect to purchase 100% of a company’s receivables, single invoice factoring, or accounts receivable factoring, is gaining in credits. Accounts receivable financing helps businesses that don’t get paid for 30 to 60 or 90 days by advancing up to 90% against invoices. Obviously, it is a requirement for the factoring company to evaluate the creditworthiness of the client’s customers. Funding can often be provided in 24 hours, and a commission fee is involved.

In relation to the recent economic downturn, invoice factoring has become a highly effective cash management tool at present. It is most often small businesses that experience cash flow problems during a recession, and many employers find it difficult to meet payroll, purchase supplies, let alone pay benefits and Workers Compensation. Factoring allows businesses to obtain cash based on the money they know will be coming in.

Factoring isn’t the same as a traditional bank loan. Rather, it’s the purchase of financial assets, or accounts receivables. Bank loans require two parties, while factoring involves three. Banks base their decisions on a company’s creditworthiness, whereas factoring is based on the value of the company’s receivables.

Several factors’ professional rates are competitive since each client’s circumstances vary, which may have an effect on the charges.

Accounts receivable factoring has been around for over 4,000 years. To know more about this financial concept, contact the Interface Financial Group (IFG) at 877.210.9748.