If you are starting a new business, you haven’t had the chance to build credit, and at that time factoring is a better solution. Factoring is mainly useful in small business just getting in development. Factoring advances are easier to reach than small business loans because banks seem only at your company’s praise Also, the interest rates on a business loan from a bank may be pretty steep with a factoring companies; you only have to worry about the business fee. Factoring is a safe and normally used way to help your cash flow keep up with your business. An ordinary practice for small or rapidly growing businesses, factoring company’s service is a faster, simpler method of acquiring working capital than a conventional bank loan. Credit quality of your customers plays an important role in the transaction, and it determines the amount of money you can get. This feature makes factoring very active as your financing line can rise as your billings grow. Factoring companies structure the transaction in two payments. The first payment, about 80% of the bill, is funded as soon as the invoice is presented to the client. The second payment, about 20%, is funded once your customer really pays the invoice amount. Factoring is a great solution for companies that have enormous potential but can’t give up waiting to get rewarded by the customers.