“Third Quarter 2009: The Economy and Small Businesses” states that the US economic recovery began in the third quarter of 2009 when real gross domestic product grew 3.5 percent annualized.
But when it comes to small and medium-sized businesses, they’re not out of the woods yet, and to survive, many business owners have turned to strategies like invoice factoring. The SBA report says government spending showed signs of growth, especially first-time homebuyer credit and “cash-for-junk” auto rebate programs. Real consumption increased at an annual rate of 3.4 percent. Strong growth was shown in real private fixed investment, real imports, as well as real exports. Perhaps this was due to the general strengthening of the economy around the world.
Highlights of this report mention the fact that manufacturing production recovered and industrial production increased by 11.7 percent annualized. Additionally, the US unemployment rate rose to 9.8 percent in September 2009. Nonfarm jobs lost since December 2007 total 7.1 million.
It seems as if all economic sectors have experienced net job losses, except for health services and education. Nonfarm labor productivity increased at an annual interest rate of 9.5 percent in the third quarter.
SBA lending increased sharply, with loan volume at $247 million and 504 loans of $305 million from June to September. However, the number of venture capital deals decreased, but the dollar volume increased from the beginning of the year. Inflationary pressures remained modest as consumer prices rose 2.5 percent annualized, with the core inflation rate, excluding food and energy prices, at about 1.3 percent.
The bottom line is that many small and midsize businesses are still struggling to survive and stay in business. That’s why single invoice factoring is a popular new tactic that allows companies to factor one invoice at a time. Invoice factoring benefits businesses that don’t get paid for 30 to 60 or 90 days by advancing up to 90 percent of invoices. Accounts receivable factoring is not a loan, but the purchase of financial assets, or accounts receivable, from a factoring company.
Accounts receivable factoring is different from traditional bank loans in that bank loans involve two parties, while factoring involves three parties. Typically, a bank will base its decisions on a company’s creditworthiness, while factoring is based on the value of accounts receivable. With invoice factoring there are no minimums, no maximums, no long-term commitments, and no lengthy application processes. The factors analyze the creditworthiness of the client’s clients and can finance in as little as 24 hours.
Factoring is the purchase of financial assets, or the accounts receivable of a business. Bank loans involve two parties, while invoice factoring involves three parties. Typically, a bank will base its decisions on a company’s creditworthiness, while factoring is based on the value of accounts receivable. One factor analyzes the creditworthiness of a client’s clients and, once approved, pays in as little as 24 hours.