|Benefits of Credit Card Factoring
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What Is Credit Card Factoring?
Credit card factoring is a system in which financial institutions give businesses cash to enable them to cater their daily expenses. The system takes into consideration a firm's history of transactions made through credit cards. While a firm may be conducting profitable ventures, it may be left short of cash as it awaits processing of its transactions made through credit cards. During this waiting period, the firm still has to pay for daily operational expenses that the business incurs. This is where credit card factoring comes in: to help keep the business operational while its credit card transactions are still being processed. The firm is given cash based on its past transactions made using credit cards.
In credit card factoring, the financial institution looks at the firm’s sales that will be made in the future through use of credit cards. The institution then agrees with the small business to purchase future credit accounts at a discounted rate in return for immediate advancement of cash. In this system, a firm’s history in sales and its credit rating are not considered during approval for the advancement of cash. Furthermore, any repayment of cash advances using the credit card factoring method is calculated taking into consideration the firm’s volume of sales. Therefore, the payment will be high when the sales are high and low when sales are low.
|In credit card factoring, the financial institution looks at the firm's sales that will be made in the future through use of credit cards.|
Merchant Cash Advance Services
At Merchant Cash Advance, our clients benefit from a wide range of services that help them keep their small business operational during tough times. We provide cash advances to mid-sized and small businesses that are struggling to get financial support but lack enough collateral to enable them to qualify. Our credit card factoring services help small businesses acquire capital for expansionary ventures or simply to cater for the daily operations in their business.
How We Work
First we evaluate a firm’s credit card transactions history before coming up with a cash flow solution that is fit for the business. We acquire an agreed amount of the future sales of the company made through credit cards. If company sales through credit cards are at a minimum of $5,000 per month and the business has been operational for the past year, the business is qualified to receive amounts ranging from $5,000 -- $150,000 from our company.
After approval, the funds will be deposited into your business account. Funding takes place approximately within two weeks. You can apply for advance cash by filling the application form on our website. Make sure you have proof of ownership of your business when applying for an advance.
Since the advance we provide is not a loan, there is no discounted rate of paying for it, nor are any early payments considered for discounts. However, additional funding may be provided if 90% of the advance is repaid. After advances are made, we collect fixed amounts of your daily MasterCard or Visa transactions once they are cleared. Merchant Cash Advance will send you a printed statement every month.
We work with a number of financial processors around the world. However, if your transaction cannot be processed by one of our partner processors, you will need to shift from your current credit card processor to one of our partner processors. This is a simple process and our staff will handle the paperwork for you.
Benefits of Credit Card Sales
In giving out credit card financing, no cash or credit statements are required nor are any business proposals needed by the credit card factoring institution. Thus the process of obtaining financing is quick and almost any small business with credit card sales qualify for the advances. The advancement is usually made in a number of days
Once a firm has received cash advancement through credit card factoring, it is not required to pay regular or fixed payment to the credit factoring company. Instead, the firm’s credit card processing merchant will be directed to pay a fraction of the future credit card sales to repay the cash advanced to the firm. The repayment process is automatic and every sale is credited to repayment of the cash advance. The fraction charged on sales will not be adjusted to correspond with any increase in sales.
Improvement of the Firm’s Cash Flow
|Credit card factoring provides businesses with risk free and quick cash that can be used for daily operational expenses or any unforeseen emergencies.|
Small businesses benefit from credit card factoring since they can always have an operating cash flow in the business. The businesses can obtain huge sums of money based on their credit cards sales that were made but are yet to be processed by banks. This cash flow is important in keeping the business afloat, and protects it from going under due to lack of money that is either tied up at the transaction processing points or held up by customers who are slow to pay.
Greater Capital Access
Many traditional financial lending institutions lock out small businesses from accessing credit from them due to a lack of collateral or poor credit track records. As a result, many small businesses find it difficult to stay afloat and most of the businesses end up closing down. However, credit card factoring companies have come up with ways of helping small businesses stay afloat. In credit card factoring, small firms can get advances in regard to future receivables in credit even if they do not have any collateral or any credit track record. A fraction of future sales made through credit cards are deducted automatically as payment for the advance.
Risk Free Cash
Credit card factoring provides businesses with risk free and quick cash that can be used for daily operational expenses or any unforeseen emergencies. It is also helpful to firms that wish to expand the establishments without risking paying a high interest charged by traditional commercial banks.
Credit card factoring is available to businesses as long as they continue to receive future credit card sales. Any previously advanced cash does not need to be first cleared before a new advance is given. Provided a business is continuously attracting sales through credit cards, it can be given another advance.
Free Use of Advancement
The small business that has been given an advancement is free to utilize the acquired funds in any way it deems fit in its operations. There are no restrictions or follow ups by the credit card factoring institution regarding the use of the money.
Credit card factoring is an inexpensive and quick way of obtaining financing for small businesses. Small firms that take credit factoring options enjoy many benefits and have higher chances of surviving the unpredictable business world.
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