Let’s also add the following assumptions:
· Cost of goods sold is 70% of revenues.
· Line of credit from bank is $500ꯠ.
· 7% of the available line of credit.
· Current annual revenue is $2 million.
· Capital availability through factoring is $1 million.
· Percentage of sales factored is 50%.
· Annual percentage sales increase without using factoring is 5%.
· Annual percentage sales increase when using factoring is 25%.
The accompanying chart reflects how factoring can profitably replace bank funding for businesses that can achieve more sales when provided with virtually unlimited cash-flow financing from factoring.
See the main story that goes with this article: Factoring: Jet fuel for attracting packagers
