Start-up tech companies in a growing economy have a great tool which allows them to minimize the cost of borrowing money and to keep up full ownership of the business. This tool is called factoring. This is the alternative form of financing where businesses sell their invoices for cash advances.
 High tech start-ups need to break through the barriers of entry in their corresponding markets and to be able to manufacture enough product/offer enough service to meet the demand for their goods. They have usually needed considerable cash flow for this. However, it is venture capitalists that start-ups turn to even though they demand unusual high returns and often require limiting terms that include shares or ownership in the company.
Factors buy invoices or accounts receivables, for cash. The factoring company buys the invoice for a predetermined rate, typically 1.5% to 4%, and then gives a cash advance of 70% to 90%. But when payment is received pays the company with the remaining balance.
As factoring requires less commitment than most other forms of lending, it can be handled faster and with fewer obstacles. It is also slowly becoming the popular choice among growing companies. Using factoring, a company can decide how little or how much they want to factor. That's why, there is no limiting line of credit. Moreover, there are no taxing commitments such as giving up control or ownership of the company. Having been approved with out business plans, accounts are based on the credit worthiness of the businesses clients. Once approved funding can be received within 24 hours.
Companies with high-growth opportunities that can not get bank financing and are considering venture capitalists can use factoring. This is because it will be the best solution for them. At first, you should speak with a factoring specialist and learn about factoring. Only then you can give away ownership of your company of 30% or more of your benefit.
| 
