Here are some more information for Small Factor:

Factoring Versus a Small Business Loan

Rather than trying to get a small business loan, many small business owners have discovered that they can use accounts receivable factoring to help stay afloat during tough times.

Loans take time. The first step usually is to meet with a loan officer, and you'd better be prepared because you'll need to present a business plan justifying the loan amount that you want. The standards for a small business to qualify and receive a small business loan is different than for a medium sized company to qualify for a loan, and often times a small business won't have the assets of a medium sized business, nor will it have substantial cash flow to deal with any shortfalls.

Many of today's small businesses have discovered that factoring is an even better solution. Many businesses do not get paid right away for delivered products or services, and as we know, every business needs some cash on hand in order to sustain and grow. So what happens if you do not get paid for a few months, and you do not have time to seek alternative financing such as a loan through banks or venture capitalists?

Invoice factoring is a fast way to turn receivables into cash. In an ordinary scenario you might have to wait 30, 60, or sometimes even 90 days for invoices to be paid, whereas factoring companies can pay what's owed up front.

Factoring is basically when a business sells its accounts receivable invoices at a discount, and it is different from a bank loan in several ways. Banks base their decisions on a company's credit worthiness, whereas factoring is based on the value of the receivables. Secondly, factoring is not a loan - It's the purchase of a financial asset, or receivable. Getting a bank loan involves two parties, while factoring involves three.

let's not confuse factoring with invoice discounting
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Original sentence 7 it is the purchase of a financial asset, or the receivable
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Original sentence 8 Factoring is basically when a business sells its accounts receivable invoices at a discount, and it is different from a bank loan in several ways
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Original sentence 9 Factoring is the sale of receivables
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Original sentence 10 To summarize, single invoice factoring is when the seller sells one invoice (the receivable) at a discount to the third party
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Do not confuse factoring with invoice discounting. Factoring involves the sale of receivables. Invoice discounting is borrowing where the receivable is the collateral. There are three parties involved in factoring including: the one who sells the receivable, the debtor, and the factor. The receivable is a financial asset associated with the debtor's liability to pay money owed to the seller, which is usually for work that has been performed or products sold.

To summarize, single invoice factoring is when the seller sells one invoice (the receivable) at a discount to the third party. The factor obtains the cash. The sale of the receivable transfers ownership and risks to the factoring company.

About the Author

Kristin Gabriel is a writer who works with The Interface Financial Group (IFG), North America's largest alternative funding source for small business. The company provides short-term financial resources including invoice factoring, serving clients in more than 30 industries in the United States, Canada, Australia and New Zealand. IFG offers expertise in accounting, finance, law, marketing and banking. www.ifgnetwork.com

I have a VERY small business, I'm still a little confused about how to factor my "inventory".?

I have a VERY small business, I'm still a little confused about how to factor my "inventory". I'm an artist, I have an inventory of small prints/notecards that I purchased and have included them in my tax return for the past 2 years. But I haven't sold any of them in 2006. How do fill out part III of schedule c? Also, what if I used 2 of the notecards for personal use? I would like to know for the next year. Thanks!

Just carry the beginning inventory amount down to the ending inventory amount. It's okay to enter zero under "purchases."

For items withdrawn for personal use, just enter the value of those you used on line 36. If you don't buy anything, just enter the amount in parentheses to denote a negative number, then subtract that from the beginning inventory amount to obtain the ending inventory value.

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