Margery Black has a successful distribution business supplying specialty candles to some of the largest retailers. "I have always had an excellent relationship with my customers and while I am required to extend net 60 or net 90 day terms I have always been paid. When the economy started showing signs of trouble, the first impact I felt was a slow-down in my sales, the second was a handful of my customers simply closing shop leaving me holding the bag. I had major concerns with 2 of my largest customers.
If they filed for bankruptcy, it would cost me my business".
Margery needed peace of mind. "Gateway was able to offer me credit protection on a handful of my largest customers, which allowed me to continue to ship without any concern for client failure". Gateway's Credit Protection program provides catastrophic coverage in the event of debtor insolvency.
What does it mean when a company says it offers you business protection? It could mean that you would have to invest in insurance policies to protect your business, or it could mean a program to help protect your sensitive digital data. What about financial protection? If you look around, you do not see a lot of banks talking about offering financial protection to businesses. But that does not mean that financial protection does not exist.
Why Would You Need Credit Protection?
One of the great things about business is the variety it offers. You have customers with a variety of payment schedules and vendors with a variety of invoicing requests. Variety is great, but it can also create instability. For example, you may have a large portion of your Net 30 customers go out of business due to a bad economy and leave you with just the Net 60 and Net 90 clients. Instantly, your cash flow is affected and your credit rating starts to suffer.
If you sell luxury items, then your business is already facing challenges on a daily basis. A bad economic situation around the world will only make those challenges more pronounced. Suddenly, your company gets behind on its bills and the downward spiral begins.
Can A Bank Bail You Out?
It is frustrating how a bad economic situation can turn in a cyclical nightmare. The economy cuts into your business and slows your cash flow. Since your cash flow is damaged, you cannot pay your vendors on time and your credit rating starts to drop. Since your credit is taking a beating, the banks cannot offer you funding assistance. Without the bank's help, your situation just gets worse and worse. The worse your situation gets, the faster the bank hangs up the phone when you call.
Factoring Gives Your Company Protection
Throughout the bad economy, your company continues to bring in invoiced sales that should allow you to sustain operations. But with Net 60 and Net 90 customers making up the majority of your invoices, your cash flow is simply not there. In your mind, that flow of invoices should count for something. A company that factors invoices could not agree with you more.
The process of retail distribution factoring will turn those Net 60 and Net 90 invoices into cash. As long as you have invoiced sales streaming in from clients with acceptable credit, then you have the cash flow foundation you need to keep your business moving along. Distributor factoring is the simple and convenient way to pay your bills on time and protect your company's financial future.
You always want to do everything you can to protect your company. That is why you take out insurance policies and invest in financial products. But when it comes right down to it, a distributor factoring offers the most substantial financial protection that your company will ever need.