Factoring: Part 1

Factoring: Part 1

July 6, 2020 by investor

Hello, this is Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

When you sell a physical product and invoice the customer, it can take 30, 45, 60 days or more before they pay.  

Factoring provides funding by reducing your accounts receivable by selling the invoice. 

The factoring company gives you cash immediately when you sell and takes a transaction fee on the use of their funds.

The factoring company is now at risk for non-payment.

Factoring works well for consumer product companies that have cash-flow challenges as the business requires capital to build the product, sell, and ship the product only to collect payment later. 

Factoring reduces the amount of working capital needed and may reduce the amount of funding you need from equity capital raises. 


Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.


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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.

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