Articles by Peter Crotty

Funding Your Small Business through Factoring

Tuesday, February 9th, 2010

Consider a small staffing company that provides 10 security guards to a local branch of a large national retailer. Each week, the staffing company (“supplier”) invoices the retailer with Net 30 Day terms, and receives payment about 45 days later. This is quite common, as the retailer will retain a good credit rating with this type of payment history. The supplier makes payroll each week with payments received that week from invoicing that was done 45 days earlier.

Finally, the staffing company receives the break-through that they’ve been working on for some time: the retailer offers the opportunity to provide them with 30 security guards, working at other branches. The obvious challenge, however, is how to make the newly increased payroll each week, when the first of the larger payments will not arrive for 45 days after the first, larger payroll is due.
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