But they should feel pretty easy about up-fronting you the money. Then you can do some fund-raising to help pay the interest. As you are a nonprofit, there may also be local philanthropists or businesses to help you with funding and to tide you through this cash-flow crunch, Burnes says. In a factoring deal, you sell your accounts receivable at a discount to a third party at the time you send the invoices for your goods or services, giving you immediate cash and someone to manage your accounts receivable. When the underlying bill is paid, the funds will go to the factor, who will typically also charge you interest.
Traditional factoring is concentrated in the apparel, textiles, and furniture industries.
Nontraditional factoring involves virtually any industry you can imagine, anywhere there are credit terms and sales by businesses to institutional customers like governments and schools. A subset of its membership specializes in working with government contractors and small businesses, Stuchin says. Ask our small-business experts. Because of the volume of mail, we won't be able to respond to all questions personally. The McGraw-Hill Companies Inc. All rights reserved.