The word “factoring” is a mathematical process known and used in solving many different polynomial equations intended to simplify. However there is another definition for the word “factoring” when not referring to the term in math. It is a financial service whereby a factoring firm advances funds for expected payment to a business.The business sells or transfers title to its accounts receivable to the factoring company.The seller’s customers remit the payment directly to the factor, or on a non-notification basis, where the seller remits to the factor and handles the collections.

Since the beginning of civilization, the business term of factoring has been around for many centuries (4,000 years) in various forms. It was first used by the Mesopotamians in their business dealings. The Romans used a type of factoring by selling discounted promissory notes to a secondary market. But factoring really gained in popularity tremendously was between the American colonists and merchants in Europe when the colonies sold raw materials to European merchants who paid the colonists in part for the materials. Factoring was like an advance with which the colonists could continue their operations, and factoring eased cash flow.

At about the time when the American Revolution took place, factoring changed. The concept of credit became more important – not the credit of the company itself but rather the credit worthiness of its clients …for better cash flow. Some typical factoring solutions include export factoring, which is offering factoring services for companies who export from the United States and Canada; inventory financing, a solution promoting a company’s growth by funding them when they must expand and purchase inventory; as well as P.O. Funding, to finance purchase orders when a company receives a purchase order and needs to purchase supplies to fulfill the order.

Factoring companies do not always expect to buy 100 percent of a company’s receivables, and there are no minimum or maximum sales volume requirements. In fact there is a new form of factoring called single invoice factoring where just one invoice is factored.

Professional rates from a factring compnay are competitive because each client’s circumstances vary, and this may have an impact on the fees charged. Factoring allows choices of invoices to be factored, enabling customers to retain most of their money, to guarantee adequate cash flow while spending the minimum fees.

The Benefits of Factoring

The main advantage of factoring is that it provides you with upfront cash rather quickly. You do not have to wait days, weeks or even months to get approved as you do for a traditional business loan. In many cases, it takes only a few days to set up a factoring arrangement, and once it is set up, you can usually get your money by the next day.

Factoring also does not require that you continually re-apply to get more money. Once an arrangement has been reached, you can sell your invoices to the factor again and again without the inconvenience of being approved each time. Basically you get you money more quickly.

It can be a great way to improve your company’s cash flow and ensure that you have the funds you need to keep operating your company.

Before the 1930s, the most popular industries for factoring were the garment and textile industries. These are industries that rely on raw materials. In order to make sure that companies could continue to buy raw materials to produce clothing and textiles, factoring was used. it soon became evident, after World War II, that factoring could work effectively for any business that invoiced othersv.

When interest rates were on the rise and banks were increasingly regulated during the 1960s, 1970s and 1980s, companies had a hard time getting traditional financing – much like it has been since the recession started in 2008. Factoring grew popular then, and it is growing popular now. Banks do intensive credit checks when providing a loan, whereas factoring firms do not – What they do is to focus on checking the credit of those who owe the business the money. Invoices are purchased, minus a fee – making it possible to avoid interest charges. Small business, startups and rapidly growing businesses benefit most from factoring.

Today, almost any business with good customers and outstanding invoices can benefit from factoring, and it continues to be a viable alternative to traditional financing such as loans, and credit cards.

Source: http://www.submityourarticle.com

Equity loans, credit counseling, debt consolidation, bankruptcy, and debt management plans are some of the options available to consumers today that are overwhelmed by outstanding debt. Although these programs all attempt to help consumers manage their debts effectively, many people do not dispose of their debts through these programs. So why do 50% of consumers fail to eliminate their debt using one of these programs? All of these programs have one fault in common that causes them to fail for the majority of people.

You may be thinking that it is the interest rates, the quality of the companies, or the fees that cause people to fail to eliminate their debts when using these programs. It is none of these, however. The main issue with most debt management programs is that they require you to pay a fixed amount every month with no exceptions.

So why are fixed monthly payments a problem? The average consumer does not have the exact same income every month. Seasonal workers only work for part of the year and therefore make more during those times than they do during the off season. Commissioned salespersons depend entirely on sales for their income – the more they sell the more they make and vice versa. Part time workers often have variable hours and thus a variable income. Other workers may have overtime hours periodically.

Now take a moment to think about your expenses. With the exception of your rent or mortgage and your car payments, do you spend the same amount of money every month? Probably not. Monthly bills such as your phone bill and utility bill can vary from month to month. Other expenses such as medical bills and car repairs can arise unexpectedly, possibly leaving you short on money by times.

A variable income and fluctuating expenses may not be a problem if you have money left over at the end of each month and additional money in your budget to allow for unforeseen circumstances. Most consumers, however, are having difficulty paying their bills and are living from one paycheck to the next. In such a situation unforeseen expenses may severely damage one’s budget.

Most people have good intentions upon entering a debt relief program. For example, let’s take a look at credit counseling. You need help managing your credit card debts so you enter a credit counseling program. Your counselor negotiates a monthly payment of $500 which sounds good to you. At first everything is going smoothly – you are able to make that $500 payment every month for the first several months. Then the water heater breaks and it will cost $800 to fix it. So, unless you enjoy cold showers, you will have to miss your $500 payment to the credit counseling agency this month and will only have enough money for a portion of next month’s payment. This may leave you in a worse financial position than before, since you absolutely cannot miss any payments when you are in a debt relief program.

Most debt relief programs are inflexible. The majority of them do not make allowances for emergencies such as car repairs, medical emergencies, or any other unforeseen circumstances. You cannot call the court trustee, your loan officer, or the credit counseling agency and tell them that you will not be able to make your payment this month. If you could, then these programs might have a higher success rate.

There is one program available that offers the flexibility needed for today’s consumers. It is called debt negotiation, or debt settlement. It is ideal for people who are having trouble making their monthly payments and are faced with overwhelming debts. In some instances it may be better alternative than bankruptcy, which can negatively impact your credit rating for at least seven years and make it nearly impossible to obtain financing during that time.

Why is debt settlement such a flexible option? The answer to this question is quite simple: you control the money. A separate savings account is set up for you and you put money in it until there is enough to make a practical offer to one or more of your creditors. This is the most flexible of the debt management options available to consumers, but it does have some disadvantages. The monthly payment is deposited into an account that is set up and controlled by you purposely to repay your debts. If you have a tough month financially it means that you have less money to negotiate with. If you are able to make up the difference later, that is great and you will have more money to settle with. If not, that is how life goes sometimes. Once you have enough to negotiate one account (generally between 35% and 50% of the total balance owed), it is time to make an offer. If your creditor accepts the offer, you can start to save money to approach the next creditor, and so on.

Keep in mind that debt settlement will not eliminate all of your debt problems. However, if you have to miss a payment because of an emergency the program does not end. If other debt management programs were as flexible then there may be a higher success rate and perhaps fewer people would feel the need to declare bankruptcy.

Source: http://www.submityourarticle.com

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There are all kinds of questions surround the somewhat mysterious credit score. That mystery is created, in part, by the very agencies who determine the number. Formulas for figuring the scores are kept secret, and the numbers are not readily available; at least not without having to do some work to get them. People often want to know what exactly a credit score is, who is behind it, what things impact your rating and what effect a credit score can have on daily life. Add to that the tough economic times we’re now in, and your credit rating becomes more important than ever. Let’s take a deeper look at what a credit score is and how it affects you.

A credit score is nothing more than an attempt to rank your creditworthiness with an objective number. It used to be that if you wanted a loan you would go into the bank, and if you had a good standing in the community, or if the loan officer had a good feeling about you, you could get a loan. Obviously, there is a flaw in that system; anybody, no matter how well-respected, can be a bad credit risk. So, by calculating the effect of different factors on your ability to repay, the credit agencies came up with a way that seeks to treat everybody fairly.

There are several different things taken into account by the credit agencies when figuring out a score. The good news is that most of them are common sense. The one thing that makes up most of your score is your payment history. Therefore, one of the best things you can start doing (or continue doing) is pay all of your bills on time. Next, don’t owe too much. Your debt-to-income ratio should be at 25% or less. That means the amount you owe should not exceed 25% of your income. Don’t open too many accounts in a short period of time, and don’t close too many either. Only apply for a loan or credit if you really need it. As mentioned, most of these things are common sense and they will always go a long way towards improving your overall financial health.

Is a credit score really that important, after all, it’s only a number, right? Right, but it’s a pervasive number at that. The most well-known example are lenders. They will use your credit score to determine whether or not you get a loan, and if so, what terms you will get. However, your credit score is used by a lot more than just lenders. If you apply for a job, your potential employer may pull your credit report before making their hiring decision. Landlords use credit scores to see who they will rent to. Insurance companies use them as part of their risk assessment before offering you a policy.

There is no doubt that your credit score is important. Now that you have more information on what it’s all about, you can take steps to maintain or improve your score.

Source: http://www.submityourarticle.com

Contrary to popular belief, the three major credit bureaus are not a division of the federal government. They are independent for-profit companies that operate under the regulations and restrictions of federal consumer protection laws. These laws govern proper account billing, collection practices, and credit reporting. The following is a brief explanation of how they protect you.

You can protect your own credit by being aware of the legal facts regarding your consumer credit protection rights. The umbrella of these federal protections is the Consumer Credit Protection Act. This is a federal law designed to protect consumers from harmful credit practices. The law regulates consumer credit agencies, collections agencies and creditors. It prevents credit discrimination and attempts to help victims of identity fraud or theft.

The Consumer Credit Protection Act contains 5 important sections:

1. The Fair Credit Billing Act (FCBA)

2. Debt Collection Practices Act

3. The Fair Credit Reporting Act (FCRA)

4. Fair and Accurate Credit Transactions Act (FACTA)

5. Equal Credit Opportunity Act.

All too often consumers have their credit damaged unjustly as a result of misinformation being placed in their credit file. Have you ever received a bill and didn’t know what it was for? Billing errors can damage your credit standing, even if they didn’t belong to you! The Fair Credit Billing Act was enacted in 1975 to protect consumers from billing errors, so that they can be resolved expeditiously and in a fair manner.

The law protects you from incorrect charges or charges for goods and services that were not accepted or delivered as agreed. In addition to resolving billing errors, it also protects you against fraud in the event of charges made by persons not authorized to use the account. The law also provides that a creditor may not report an account delinquent to a credit reporting agency while there is a dispute that has been filed by the borrower or party involved.

Some other rights you have from the FCBA are: The right to challenge a billing error with a creditor, the right to have a creditor respond within 30 days and correct or verify within 90 days. The right to not have disputed accounts reported as delinquent. The right to report an account as “in dispute”. It’s also important to know your rights with regards to getting contacted by the dreaded bill collectors. Third-party collection agencies are regulated by the Fair Debt Collection Practices Act.

The Fair Debt Collection Practices Act outlines what a debt collector can and cannot do in collecting a debt for others. Following is a list of things they must refrain from when collecting a debt. They are not allowed to:

1. Contact you before 8:OOAM or after 9:OOPM, unless you agree.

2. Contact you at your place of employment if your employer doesn’t approve.

3. Contact you by phone after you send written notice to an agency to stop, except to state that there will be no further contact, or to notify you that specific action will be taken if that specific action is usually taken by the collector. In that event, your account will probably be referred to an attorney immediately.

4. Contact anyone but your attorney if you have one. Otherwise, a collector may contact other people only to determine where you work or live.

5. Tell people that you owe money, except you or your attorney.

6. Advertise your debt or publish a list of non-payers, except to credit bureaus.

7. Harass, oppress, or abuse any person. This includes activities such as the use or threats of violence/harm to property or a person’s reputation, use of obscene or profane language, repeated use of the telephone to annoy someone, or telephoning without identifying themselves.

8. Make false statements when collecting a debt, such as falsely imply that they are an attorney or government representative, falsely imply that you have committed a crime, falsely imply that they work for a credit bureau, misrepresent the amount of debt, indicate papers are legal when they are not.

9. Fail to give you written notice within five days after their initial contact with you, telling you the amount owed, the name of the creditor, and what to do if you feel you do not owe the money.

10.Contact you about the debt if you deny owing the debt within 30 days after being contacted, unless you are sent proof of the debt.

11.Say or Imply that you will be attested for nonpayment. 1

2.Say that they will take legal action unless the creditor intends to do so, and that it is legal.

13.Give false credit information about you to anyone.

14.Send you official-looking documents that appear like documents a court or agency of any United States government body might send.

15.Use any false name.

16.Deposit a post dated check prior to the date of the check.

17.Make you pay for communications, such as collect calls or telegrams.

18.Contact you by postcard that could advertise your debt, or put anything on an envelope that shows the communication is about the collection of a debt, including the company name.

19.Fail to apply amounts to the specific debts you choose.

There are also many other protection laws and items in the Fair Debt Collection Practices Act and other consumer protection acts.

Source: http://www.submityourarticle.com

There are more than 20 laws that protect consumers who have a charge off. Here are the top 5 charge off laws:

Charge Off Law #1:

Right to Counsel Disputing a charge off with the creditor and credit bureaus can get ugly. Historically, credit bureaus have been fined multiple times for ignoring charge off disputes.

A charge off on your credit history is big deal. It can keep you from owning a home, getting loans for transportation, or getting credit for much needed medical care.

That’s why you have the right to hire a credit lawyer who can dispute charge offs on your behalf. (Don’t listen to a credit bureau worker or banker when they say you can’t get credit repair help.)

Charge Off Law #2:

The FCRA The Fair Credit Reporting Act was enacted in 1970. It is the federal law that regulates consumer information. Along with the Fair Debt Collection Practices Act it exists to protect you, the consumer.

Under the Fair Credit Reporting Act creditors have only a MAX of seven years to report your delinquency to the credit bureaus. – That’s seven years from the time of the original first delinquency.

Seven years is a very long time. You don’t have to wait the entire seven years however. Seven years is the MAX. You can take action at ANYtime to dispute and erase a charge off. Consider sending a charge off dispute letter to the bureaus reporting the charge offs.

Charge Off Law #3:

State Law Each state has its own laws regarding statute of limitations and debt. This means each state regulates how much time is allowed for a creditor to sue you for a debt.

Did you know that collection agencies sue people every day for charge offs (which then result in judgments) way past the statute of limitations. It is no one’s responsibility but your own to raise the question of statute of limitations.

Charge Off Law #4:

Debt Validation It is your right to ask a creditor for a validation of debt including charged off debt. If the charged off account is now in the hands of a collection agency, then by law they must provide you with the name of the original creditor and the amount owed.

They might not do this and you’re stuck with the charge off. Debt validation is more advanced for the do-it-yourselfer. I had Lexington Law file debt validation – which worked because the collection agency immediately erased the charge offs. Here’s the debt validation hotline number: 1-866-246-7311.

Charge Off Law #5:

Demand Proof Even if the creditor/collection agency has provided a validation of the charged off debt, it is your right to request additional proof.

It is the law and they must provide you with a copy of any and all contracts you signed concerning the debt. You can also request them to provide you with a copy of the last bill right before the account was charged off.

A charge off on your credit report is very damaging to your credit score and your ability to obtain credit. Interpreting the laws and knowing which apply to you can be confusing. To chat with a charge off expert, call this number: 1-866-246-7311. It is free of charge and you’ll get the answers you need about charge off laws.

Source: http://www.submityourarticle.com

Many people who are overwhelmed with credit issues want to just throw up their hands and let someone else take care of it for them, that’s where credit repair specialists come in. There are a lot of companies that will help you sort out all your credit issues, but before you go out and hire one, here are some things you need to take into consideration.

For one thing, before you pony up any money you should just take matters into your own hands and do it yourself. At least get your own credit reports and check for errors. If you want help after that point you can always hire someone. Make sure you get a report from all three credit bureaus: Experian, Equifas, and Trans Union. Don’t assume that they will all have the same information or that if one report is accurate they will all be accurate. Information can vary greatly from one company to another so check all three, carefully, for any mistakes.

If you are convinced that hiring outside help is the only way to go, keep this information in mind:

1. You should steer clear of any company that ‘promises’ you that they can remove negative items from your credit report if they are accurate. No matter how painful it might be you have to face the fact that accurate information stays, sometimes up to ten years. If a company claims they can remove accurate information keep looking, they are lying to you.

2. Make sure that you have a written contract in place that explains all the things the company will do for you as well as how much it will cost you. Some companies charge a one time up front fee, other’s will set up a monthly payment plan. Just make sure you read over the contract and that everything is spelled out. You have three days to cancel a contract, in most states – check with yours, after the day it’s signed.

3. Be sure that before you waste time and money you are committed to the plan to get your credit back on track. In almost all cases, it will take determination and even a little sacrifice to improve your credit score. If you’re not 100% committed to taking all the steps necessary you’ll just be throwing good money after bad. It’s gut check time, if you’re not ready, don’t pay for someone to help.

4. Don’t let a company try to tell you that they can set up a second credit file. That is fraud and even if they were able to do it (which in most cases they can’t) you could get in serious trouble.

When it comes to getting back on stable financial ground, you really can do it yourself with a little time and effort, but if the process just seems too overwhelming and you want to hire credit repair specialists, just keep the tips above in mind so you don’t jump from the frying pan into the fire.

Source: http://www.submityourarticle.com

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