Factoring Purchase Agreement

Factoring provides a business with a convenient way to have its receivables insured and recovered and to obtain financing for the operation of its operations. Be sure to carefully check all the provisions of the factoring agreement, first on your own, and then with experienced clothing advisors. If cash flow can decline dramatically, the company will find that it needs large amounts of cash, either from existing cash holdings or from a factor, to cover its obligations during this period. The longer a relatively low cash flow can last, the more cash you need from another source (cash or a factor) to cover your obligations during that period. As stated earlier, the company must weigh the opportunity costs of losing a return on the money it might otherwise invest against the costs of using factoring. . . .

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