Running a business is a difficult process and constantly plagued by unexpected financial difficulties. Balance sheets are constantly required to ensure that there is enough money in the business coffers to cover salaries, rent, taxes and other regular bills, as well as the purchase of equipment and stock.

For all businesses, one of the key success factors is ensuring the rapid release of funds to enable future purchase or investment decisions. If the funds are tied up instead of available for use, then the entire trading process can come to a halt.

One of the most common problems in business occurs when large sales are successfully made and the work is invoiced to the client, but payment is not made immediately. This means that there is a large amount of cash tied up in the sales books that is not available for use on other projects, such as restocking. This is an all too common situation that can prove disastrous for many businesses, especially smaller businesses and start-ups who are often the least able to effectively deal with this type of situation in the first place due to the generally low liquid assets.

This has led to the creation of a number of sales and trade finance products by larger institutions and specialist business finance organizations to fill the gap in corporate finance. These days, many banks are able to provide commercial banking services, such as factoring, bill discounting, and equity financing, to allow their clients to free up many of the assets they normally have access to for working capital.

Hiring a financial institution to handle the recovery of funds tied up with inventory or invoices and to help deal with sales books can improve a business on several fronts. Not only does the company not have to worry about going after debtors, but the money is quickly available for reinvestment; and the risks of suffering from bad debts are significantly reduced, as it can become the factoring company’s competition to chase down reluctant debtors. Factoring companies will also often make additional debt recovery litigation services available to you if they become necessary.

While some businesses may see the costs of using sales finance services as a squeeze on profit margins, the benefits of having funds accessible for use as working capital, rather than sitting with inaccessible funds that are not for the company, can prove invaluable in enabling the growth and stability of the company.