Most businesses have liquidity tied up in accounts receivable – revenue that has been invoiced but remains outstanding. The waiting period typically can take as little as 30 days but can be as much as 45, 60, or even 90 days or more for fulfillment. Contrast this with suppliers who often insist on immediate settlement of their invoices. This mismatch weakens a business’s liquidity, especially small businesses that don’t have a high degree of working capital to begin with. Obtaining funding from banks and other traditional sources can be a long and arduous process, often leading to frustration and disappointment. Consequently, business owners have discovered another option – factoring.
Whitmore Financial’s core business offering is based on the practice of factoring – the purchase of creditworthy insured “receivables” to provide businesses with immediate cash relief so they don’t need to wait 30 days or more to collect on outstanding invoices.
By selling invoices to a factor, businesses acquire additional amounts of immediate working capital (typically up to 85% of the invoice) and, in exchange, the factor receives fees for funding the transaction.
In 2013, there were more than $100 billion worth of factored transactions in North America and close to $3 trillion worldwide. Clearly, this is a large and rapidly growing area of opportunity within the financial solutions industry.
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