Invoice Factoring Can Aid Strategic Planning for Your Business

The strategic planning process should result in identifying broad directions and approaches for your company as a whole, and it is usually intended to provide direction -- with all the more tactical details to be worked out later. Most companies look at planning every quarter, so a good strategic plan will be comprehensive in scope, developed with considerable input of data and thinking. You should look at the business as it stands now - it strengths - for instance, technical excellence, strong production, excellent marketing, or customer service. This kind of objective analysis will, of course, also bring out the weaknesses of your company. Clearly identifying any weaknesses will allow you to see where you needs to seek external help, or hire professionals with the skills required to resolve the issue.

In today's difficult economic times, one area where companies are often weak is knowing how to maintain enough cash flow. This is an area where your bookkeeper, or financial management team should think about solutions that can keep cash flow going, so your company can continue to meet bills and pay its employees on time, or purchase new equipment as needed. Invoice factoring, for example, is strategy that can help. Sometimes businesses use a "use it as you need it" invoice factoring funding option, where each invoice purchase is a separate transaction and does not form part of a portfolio lending approach. The transaction is modeled as a buy-sell transaction.

Upon receipt of invoices, the factor checks the credit of the debtor named on the invoice and makes sure that the sale represented has been satisfactorily completed. Once this is done the debtor is advised of the purchase by the factor and the client receives their funding. At the end of the credit period the debtor pays the factor directly, thus completing the transaction.