Given the current economic condition, many companies will really face shortages in the start-up phase. Others, on another note, have issues with cash so they can't develop their business.

This year, 2010, efforts should be focused on improving your cash flow or even getting professional assistance. Notwithstanding the time and place, there is one tactic that always works, that is, making use of accounts receivable factoring.

When these alternatives aren't enough, factoring can help. The practice of selling accounts receivables, or invoices, in exchange for immediate cash, is a relatively quick and easy remedy for any cash-strapped company. After all, why wait for 60 or 90 days, when if you had the money now, you could turn out more orders, purchase much needed supplies, and in general, keep the business running.

Like any other type of financial solution, factoring comes with a price - but this is small as compared to the one that you have to face in case of a loan. Factoring firms will charge you fees as payment of availing of their services.

Here is how accounts receivable factoring operates: first, the factor, such as The Interface Financial Group (IFG) will want to examine your invoices and also check the creditworthiness of your customers. Then, you must prepare these documents: current financial statement, accounts receivable aging report, certificate of incorporation or partnership agreement, proof of insurance, invoices and other relevant business documents.

Because it's the factoring companies that will do the collections of the receivables, they want to protect themselves and ascertain that the invoices will be paid on a timely fashion. Funds can be given to you in as fast as 24 to 48 hours - basically after knowing which invoices will be purchased.

For instance, the factor might pay you 80 percent of the total amount of your invoices and then give you the other 20 percent when your customers pay their invoices. Fees shall be collected from you, of course.

Normally, you'll pay anywhere from 3-7% percent or more of the total the factor collects. Factors' fees vary depending on the size of your invoices, your customers' creditworthiness and the number of days in your cycle - for example, 30, 60 or 90 days.

Accounts receivable factoring isn't for everyone. First of all, it is limited to B2B organizations. Secondly, you will almost certainly pay a higher interest rate for the funds than from a traditional bank loan. But since factored invoices are just only at most a 90-day engagement, then the total interest paid shall come out to be lesser than the longer term of a bank loan.