Factoring In: With Money Scarce, Liquid Capital Delivers

IndUS Business Journal:

Two years ago, Amul Purohit took a leap of faith into the franchise industry with Liquid Capital, a financial services concept. Considering the subsequent credit crisis and the tightening noose on the loan industry, his move now seems prophetic as Liquid Capital provides small- and medium-businesses with cash that is increasingly no longer available through traditional outlets.

Liquid Capital provides immediate financing through its franchisee principles secured by credit-worthy account receivables.

Known as factoring, Liquid Capital purchases invoices from clients and once goods and services are delivered, it gives businesses an immediate cash advance, typically 80 percent of the invoice. Upon collection, Liquid Capital pays clients the remainder of the invoice amount, minus its fee. Clients are charged 3.25 percent to 4.5 percent on the first 30 days, which additional charges for longer terms.

The concept of factoring is not new and, in fact, dates back to the Roman Empire. As Liquid Capital explains, factoring provides financial stability and relieves the age-old headache induced by hearing the phrase, “The check’s in the mail,” from customers. It provides a way for companies to cash in on their sales without having to wait the 30, 60 or 90 days for payments to come in from customers.

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