Business & Finance

Businesses that do not have account receivables can use a technique that is similar to factoring to acquire quick cash advances to help their cash flow needs also. What I mean is that a merchant with a monthly amount of credit card transactions can use the number of monthly credit card transactions in place of the monthly account receivables to get quick cash advance loans.

Factoring is a cash flow technique where factoring companies purchase a percentage of a business’s account receivable at a discount in exchange for quick cash advance loans. The factoring company collects the account receivable from the buyer to satisfy the quick cash advance loan. Hence the loan usually is not paid back by the business. The amount collected from the account receivable is kept by the factoring company as payment for the loan.

In like manner, some merchant account companies will provide quick cash advance loans to merchants whose monthly credit card transactions total in the thousands of dollars. When the merchant account provider company receives credit card purchase funds from the buyers, the loan equivalent funds collected is used to satisfy the quick cash advance loan. Hence the loan usually is not paid back by the business. The quick cash advance loan equivalent amount collected from credit card transactions is kept by the merchant services provider company as payment for the quick cash advance loan. The excess credit card collections– amount greater than the quick cash advance loan amount– is processed normally.

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