Merchant Cash Advance
To get a better understanding of the terms and services merchant cash advance service providers offer, entrepreneurs should go into the discussion with vendors with a firm knowledge of industry terminology to communicate and negotiate better with a service provider.
It can be difficult to choose between financing options when your business needs cash quickly. A merchant cash advance, also known as a business cash advance, is one solution for businesses in need of quick cash for whatever reason: business opportunities, funds for operations, or making purchases to help promote business growth. It is a good idea to become familiar with industry terminology used by providers before seeing a cash advance vendor.
A few key terms and definition are:
Business Cash Advance [http://www.resourcenation.com/business/business-cash-advance/]: This is technically a sales transaction. Your business trade future sales in exchange for a one-time cash payment, where you would pay back the advance through a series of automatic payments takes from your daily credit card sales volume.
Factoring Services: Also known as invoice factoring, this option sells credit card invoices to a third party for later collection, similar to a merchant cash advance. Invoices are assigned to the factor, collecting customer's payments later on in the future.
Cash Advance Provider: Businesses-large financial institutions, small companies, or specialized services that services merchant cash advance.
Advance Amount: The amount the merchant cash advance provider "loans" to the business requesting the advance, portion of future sales in merchant advance transactions or collecting accounts receivable in a factoring transaction in which a business collects the advanced borrowed.
Factor Rate: The percentage of the advance amount the provider charges in order to provide the factoring or cash advance services. Depending on the level of risk to the provider, factor rates will vary and it will bear in advance the payment to a business.
Factoring Fee: Usually a percentage assessed from invoice amount is the fee charged by factoring service providers.
It can be difficult to choose between financing options when your business needs cash quickly. A merchant cash advance, also known as a business cash advance, is one solution for businesses in need of quick cash for whatever reason: business opportunities, funds for operations, or making purchases to help promote business growth. It is a good idea to become familiar with industry terminology used by providers before seeing a cash advance vendor.
A few key terms and definition are:
Business Cash Advance [http://www.resourcenation.com/business/business-cash-advance/]: This is technically a sales transaction. Your business trade future sales in exchange for a one-time cash payment, where you would pay back the advance through a series of automatic payments takes from your daily credit card sales volume.
Factoring Services: Also known as invoice factoring, this option sells credit card invoices to a third party for later collection, similar to a merchant cash advance. Invoices are assigned to the factor, collecting customer's payments later on in the future.
Cash Advance Provider: Businesses-large financial institutions, small companies, or specialized services that services merchant cash advance.
Advance Amount: The amount the merchant cash advance provider "loans" to the business requesting the advance, portion of future sales in merchant advance transactions or collecting accounts receivable in a factoring transaction in which a business collects the advanced borrowed.
Factor Rate: The percentage of the advance amount the provider charges in order to provide the factoring or cash advance services. Depending on the level of risk to the provider, factor rates will vary and it will bear in advance the payment to a business.
Factoring Fee: Usually a percentage assessed from invoice amount is the fee charged by factoring service providers.
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