Factoring is the preferred way of working capital financing for companies in the textile, apparel and furniture manufacturing industries, and other companies in industries that cannot afford to have their cash tied up in receivables for more than 30 days.
Factoring eliminates the time, expense and risk of collecting receivables.
It is appropriate if you want to shed ownership of your receivables and are willing to allow a third party to control this portion of your relationship with your customer. A sale-leaseback provides you with a cash infusion and helps improve your liquidity and balance sheet. This arrangement lets you raise capital and yet still retain use of your assets while allowing you to buy back the assets at a future date. This type of leasing can either be a true tax lease or act as a form of temporary borrowing of funds. Businesses that use this product typically believe that equity tied up in fixed assets can be better utilized elsewhere.