Wednesday, April 14, 2010

Account Receivable Factoring

What is Account Receivable Factoring?

Many who own their own businesses are unaware of the option of account receivable factoring for increasing cash flow and solving bad debt problems. When debtors owe money and have not settled their accounts within the agreed upon time frame, debts can sometimes be sold to a third party which will pay in order to assume ownership of the debt in question and will then pursue collection of the debt privately.

Account Receivable Factoring and other Debt Management

Account receivable factoring can be helpful as it can remove the stress of dealing with non-paying debtors and leave this in the hands of experienced professionals. Due to the risk and effort involved, as well as the need for the collectors to make a profit, debts will not be purchased at their full value. As an alternative to factoring, you can have your debt collection agency provide you with outsourced collection solutions, whereby you retain ownership of the debts collected and pay your collection agents a percentage commission of successful collections.