For over 18 years, Paragon Financial Group has provided working capital solutions for growing companies throughout the US. They serve small to large-size companies across a wide variety of industries through accounts receivable, invoice factoring and purchase order financing up to $3 million per month in volume. Paragon is a leading source for receivables financing, government contract financing, payroll funding, and purchase order financing. For more information visit www.paragonfinancial.net.
If you are starting a company in todays economic environment funding can be very tough to get. Acquiring funds and financing for your start-up is nearly impossible. Banks credit guidelines are incredibly strict. Chances are, unless youre a seasoned business with a proven track record and good corporate credit, the banks will not grant a credit line. With a lot of startup companies, the only viable asset is the account receivables they currently have outstanding. With that kind of a balance sheet, its difficult to find the funds necessary to thrive in your competitive industry.
If you are selling a product or service, terms are going to be required as well. The company might be selling a product to the government, to a large company, to a distributor or possibly retailer and the terms could be 30, 60 or even 90 days. Lets say the company started with $10,000, $20,000 or $50,000 in equity, they perform the service and then all their working capital is tied up until the money comes back. Or even worse the company might have to turn down contracts or large orders because they are simply undercapitalized. There is a solution called factoring.
A factoring company can help a business such as this keep their working capital at healthy levels while it takes slow paying customers to pay. Lets say a company supplies guard service, IT staffing or a service such as logistics. Either service or hard product, the company delivers the goods, the client is happy and there in now no waiting 30-90 days for the money. A factor will advance 85-90% against the invoice and the company gets the balance minus the factors fee. This is an excellent way to keep cash flow humming along where otherwise the company would having serious working capital issues. This can affect their ability to meet payroll and other crucial cash sensitive parts of the business.
Another way the factor can help is through purchase order financing or PO factoring. If you need capital to deliver a large purchase order, then purchase order financing can be a solution to fuel your business with the cash you need to deliver your orders and keep your start-up’s cash. PO financing enables you to make sales that exceed your current financial capabilities.
A factoring company can help finance your start-up business when your business sells goods or services for terms. A factor can help both through factoring of your invoices and PO financing.