With the recession technically over, many organizations are seeing slightly increase demand for their services. However many organizations find themselves in a peculiar situation, after streamlining their activities to survive the Great Recession, they are unable to meet increased demand from customers.
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Fiscal institutions have resources, such as working capital programs to relieve this circumstance. Cash starved, rapidly growing organizations have taken advantage of operating capital programs for several years, in order to successfully balance cash-flow and business development expenditures.
The following are three typical working capital programs:
Merchant Cash Advance: This device works on the simple premise of cash now for cash later Financial institutions lend money to the business at a lump sum, based on incoming charge card payments.
Accounts Receivable Factoring: This form of working capital is very similar to the merchant cash advance mentioned above. However, instead of credit card payments, the financial institution uses the accounts receivable of the organization as a form of collateral.
This is the main difference between the two. Usually this form of working capital is used by medium sized organizations that have larger accounts with firms that do more of their transactions on a receivable basis.
Purchase Order Financing: Primarily used by organizations that sell physical goods, this financial tool is particularly useful for large orders that strain an organization's capacity and cash-flow.… Read the rest