Merchant Financing Advance Sales Purchases

In difficult economic times, businesses need to look at ways of refinancing their credit. Merchant financing is in a difficult situation at the moment and so are looking at innovative new ways of helping to keep companies getting the credit they need. One of these ways is with an advance sales purchase.

An advance sales purchase, as the name suggests, is effectively a company buying the future sales of another business. It is estimated that this type of financial exchange is potentially worth 5 to 10 billion dollars, so this is a very lucrative area.

This of course does lead to potentially less scrupulous lenders, so you must be sure that this is the best option for you. There are many free financial consultation groups that are worth talking to prior to making any decisions as you must be certain this is the right form of lending for your business.

The important thing to bear in mind with any advance sales purchase, as with any form of credit, is to consider the price of what you are buying into. Typically, a company will claim eight to ten per cent on gross sales, or a lower amount for a lower margin company, such as a grocery store. The way in which you secure an advance differs from a loan is that a loan company will check your previous activities, while the advance sales purchase looks at your projected future sales.

The big advantage with the advance sale is that you can get a decision and an agreement much quicker than a standard loan. This is important to give you an extra edge on your competition. There are risks involved, but then this is true of any form of lending. As there are numerous companies offering this form of lending, it is a good idea to shop around!

Another advantage over a loan is that there is no financial penalty for an early repayment, which is probably why two thirds of people who take an advance sale purchase will often do so again.

Like with any form of lending, it is important to establish direct contact with your lender. Check the website and make sure there is a clear point of contact that will answer your questions. With any contract between you and the lender, make sure you ask questions and always read the fine print! With the right lender, this is a great opportunity to increase your sales and can make all the difference for your business.