![]() ![]() But for small business owners, it’s an especially frustrating reality with potentially devastating consequences. Your customer agrees to pay off its invoice in 30 days, but you. Unpaid invoices are part of running a business, no matter the size. with Fundera by NerdWallet Let’s say you own a hardware store and sell goods to another business, creating a 10,000 invoice. The intermediary closes the loop by collecting the full invoice amount from the buyer at a later date and profits from the spread. The best invoice factoring company for most people is OTR Solutions or Resolve. ![]() Proponents say the arrangement leaves all sides happy: Buyers get their goods weeks, or even months, before having to pay for them, while sellers get paid more quickly - something many small companies aren’t used to. Third parties, traditionally banks and now also independent intermediaries backed by investors, pay suppliers the value of their outstanding invoices minus a discount. In theory, it speeds up payments owed by businesses to their often cash-strapped suppliers. Financiers say the practice, known as supply chain financing, is a “win-win” for all sides, but small business advisers call it “supply-chain bullying.” Regulators are wary, concerned that big companies use it to mask indebtedness and as a cover for crunching small contractors. Yarilet Perez What Is a Debt Collection Agency A debt collection agency is a company that acts as middlemen, collecting customers’ delinquent debtsdebts that are at least 60 days past. The firms give vendors cash sooner than if they’d waited for customers to pay - if they’re willing to accept less than what they’re owed. A global industry has grown up of financial go-betweens who buy unpaid invoices at a discount. Now the concept is being taken to new levels of complexity. It often makes good business sense to delay paying suppliers, keeping cash free for other purposes. ![]()
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