Over the course of our nation's history, literally dating back to our country's foundation, the concept of factoring has been a generous concept in the world of business. Simply put, factoring is when one company sells their accounts receivable, or invoices, to a factor, or an outside company. The price of this sale is usually ten to thirty percent less than the actual worth of the total invoices, which sets up a risk for either side. In the scenario of the seller, they get to cash in on their company's unpaid assets and receive a sizable cash transaction they can use to either stuff back into their company, or put toward a new venture. However, the seller will also lose up to thirty percent of overall invoice worth, meaning their need to expedite their payment could cause them to miss out on a lot of money. In the scenario of the buyer, one gets the potential full worth of the invoices for a heavily discounted rate. The buyer risk comes from whether or not the invoices they bought get paid in full. If the clients have a poor credit history, they may end up taking a loss or waiting longer than expected for payment. Thus, one enters the trapdoors of small business factoring.

Thus, one needs to play off of their competitors, adapting faster.

That is to say, if you have a strength, capitalize on it. If you have a weakness, use it to prop up your strengths and improve upon it.

Big businesses work to improve their flaws because they have the resources. A small business cannot compete with a big one on the issue of price, and so they must take a different route, like in customer satisfaction.

It mirrors the same relationship of buyer and seller in small business factoring. Where one person has a weakness another no doubt has a strength, it's how you employ those sides against your competitors.

One must do their best to see the relationship at hand, and work alongside them, not go against the grain.

In fact, the only time a business should go against the grain is if they are willing to lose what they've begun. If that is a risk they can put on the table, then rub anyone you want the wrong way. If you have people relying on you and cannot make those risks, it is important to find a way to move differently in the same direction as competitors.

Last thing one should remember if they decide they are going to be entering into a small business idea, whether it is a reliable and established idea such as small business factoring or not, that it's a rough climate right now. The economy is off to a slow uphill climb, but that climb is going to take years. One must be ready and willing to put their model against an age of Internet technologies, social media, and so on. There is a lot to adapt to, and one knows that small businesses are getting continually crunched these days. That being said, innovation is the key word of the game and that should not be forgotten.

I'm a financial consultant specializing in financing for contractors. You may also be interested in reading more information about small business financing news.