Capital sources: Receivables financing and factoring

Certain small business owners can get quick cash by selling their receivables at a discount. Called factoring, this method is a way to increase cash flow without increasing debt. It largely depends on the credit worthiness of your customers, but also on the amount of your monthly invoices.

If monthly invoices regularly total at least $8,000, factoring firms will act as a collection agency for your company. First they deduct a factoring fee, or a percent of the invoice, then pay you immediately for the balance of invoice. They later collect from customers when the account is due.

Besides the advantage of quick cash, factoring is only limited by the volume of your company's business. A bank loan is usually limited by the amount of company assets.