Alternative Funding Options
Account receivables factoring
Many businesses extend credit to customers on net terms for goods or services provided. The collection of this credit is usually considered reliable due to the recurring nature of most customers’ relationships and/or the business relationship with customers. These unpaid balances are referred to as Accounts Receivable. “Factoring” is the selling of accounts receivable or invoices to a third party as a method to secure immediate, working capital.
A factor company purchases receivables by giving the business owner an advance payment up front. This advance payment is usually 70 - 90% of the total value of the receivables. After charging an administrative fee (2% and up), the remaining balance is released upon full receipt of payment for the receivables/invoices. This is a financing method that allows a business to make potentially larger sales with the working capital to continue operations and further growth.
Partnering with a leasing company to sell and lease back equipment can be an effective technique to generate funds for your business. There are a number of benefits associated with leasing equipment such as expensing payments for equipment as opposed to capitalizing the expenditure. There are restrictions that should be taken into consideration to determine the tax implications of expensing vs. capitalizing the cost of equipment. You should consult with a tax advisor knowledgeable about your specific situation to assess your options.
Other Funding Options
ABMI has assisted thousands of business buyers/entrepreneurs with the financing arrangements needed for their acquisitions. We've been specializing in financing small business acquisitions since 1982. Starting with brokering businesses in metropolitan Kansas City almost 30 years ago, ABMI has represented business owners in Missouri, Kansas and throughout the Midwestern USA, and has provided financing assistance to business buyers from every state in the USA, and from many foreign countries. Our agents/consultants/advisors are well versed in all aspects of business acquisition financing.
For information on various funding options, and to arrange a free, no-obligation consultation, you may phone ABMI at 913-341-6300, or register with this ABMI web site.