Accounts Receivable Financing for Telecommunication Companies

Headquartered in Dallas, Texas, a company provides telecommunication and infrastructure services to a major cable provider, mainly providing underground cable installation and tower services at construction sites. The telecommunication company’s two owners had worked in the industry for many years and had struck out on their own two years ago. The Company landed a valuable new contract with a prime cable provider. In order to meet the personnel demands of the new contract, the company needed to add technicians, which meant increased payroll, benefits and related expenses. Waiting 30, 60 or sometimes 90 days for invoices to be paid put the Company in a cash crunch and they were unable to meet new payroll expenses. Although the Company was aware of accounts receivable financing, they had not considered it until they heard about factoring through a search on the web. Accounts receivable financing is a financial exchange between two companies. One company, the factor, purchases the accounts receivable of another company in need of cash. The process is a very simple and efficient way for a business to get cash when they need it without going the traditional route of getting a bank loan. The exchange benefits both parties. One company gets cash and the other (the factoring company) buys the receivables at a discount. Once the receivables are collected, the reserve is given back to the seller minus the factor’s fees. The factoring company’s receivable financing quickly provided the cable company with the cash flow they needed, when they needed it, so they could take advantage of new contracts and continue to grow their young company. Instead of waiting 30-90 days before payment, they received cash within days after completing the job. This almost immediate access to money that they have already earned will give them more options. If they want to take on more clients, they will have the capital to do it. If they need to pay bills already outstanding, they can do this as well. Receiving financing through a factoring company can significantly improve any cash flow problems. The cable company now has the potential to dramatically improve their business with the accounts receivable facility in place. When looking for a factoring company make sure they specialize in the company’s industry. In this case cable contractors. A factor that has the expertise and industry knowledge that clients can rely on when looking for a financing partner. Doing this will help ensure the smoothest, must efficient process in receiving financing.