Managing Your Working Capital Through Credit Card Factoring

If you are an online seller and you accept credit card payments, you should consider a method of business financing known as credit card factoring. Let’s discuss how credit card factoring is done and how it can benefit your online business.

credit card merchant processing How Credit Card Factoring Is Done

Have you heard of accounts receivables financing? This method of business financing is done by selling existing invoices to a cash advance lending company to acquire cash. Thus, the business owner won’t have to wait for the customer’s payments to start using the funds.

Lenders usually offer 80% cash advance from the amount of the invoice submitted. Once the lending company receives the complete payment from the customers, the business owner can receive the other 20% cash from the invoices submitted.

In concept, credit card factoring works in the same way. The only difference is that customer payments will not be sent in cash but through credit card. By selling credit card transactions, a business owner can utilize its profits or sales without having to wait for a 30-day repayment period.

Many businesses today turn to credit card factoring because it is easier to avail than traditional business loans. Instead of waiting for a few months to get approved for a business loan, an online merchant can get financing help from a credit card factoring lender at a sooner time.

Business credit isn’t required to get approved for a credit card factoring financing. Whether or not you have good credit history doesn’t matter. If your business reaches the lender’s minimum quota of credit card transactions each month, then you can apply for a credit card factoring loan.


How to Utilize Credit Card Factoring

Merchant ServiceThe money you receive from your factoring lender can be used for many purposes. If you need to repair one of your machines or purchase a new machine in a hurry, credit card factoring can help you.

If you need to hire additional workers for this season to meet your customer orders, you can use the funds to pay for new workers without delay. Credit card factoring is also a great help when financial emergencies arise.

Because credit card factoring involves fast and easy processing, it is still a viable option even if you’ve already applied for a bank business loan. While waiting for your loan to get processed, you can use your credit card factoring loan to start your projects right away.

Use Factoring Wisely


Just as caution is needed in obtaining other types of business financing loans, business owners must exercise discretion and care before applying for a credit card factoring loan as well.

See to it that you’ve studied the Terms and Conditions of your lender before signing up your contract. It is important to choose credit card transactions only from your trusted customers to ensure payment.

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Related Posts:

Acquiring Business Funding Through Merchant Cash Advance
Managing Your Working Capital Through Credit Card Factoring
Business Cash Advance – an Efficient Business Financing Option
Seller Responsibilities With Credit Card Merchant Processing
The Cost of Credit Card Payment Processing

 

About the Author:

Melanie James has spent the last 14 years working with businesses to implement quick, effective and inexpensive changes to their businesses to increase productivity and their bottom line.

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