Selling Steel Reinforcing Bars (Rebar)? Learn How Factoring Can Help You Grow

Companies that sell reinforcing steel bars (or concrete bars - also known as Rebar) have seen a boom in recent years. Many cities have seen a surge in residential and commercial real estate projects, which in turn has increased the demand for Rebar. Companies that sell, cut and bend Rebar have profited nicely from this growth – however, they have also faced a common problem in the industry. The problem is tight cash flow. 
Basically, they sell the Rebar to customers (e.g. builders, contractors) at good prices. These customers usually pay their invoices in 30 to 60 days. In the meantime, the Rebar company must wait to get paid while covering all supplier, payroll and rent expenses. Many times, this is not sustainable. Either the company stops growing, or worse, it starts missing key supplier or employee payments. Going to the bank to get business financing is not always the best solution. Why? Banks seldom finance companies in the Rebar industry. And before they finance a company, they need to see a detailed business plan, three years worth of company financials and owners with good personal credit. Also, they take months to make a decision.
 However, there is a better solution problem – the solution is to factor your receivables. Factoring receivables provides your company with an immediate advance on the slow paying invoices. This gives you the necessary cash to pay suppliers, employees and rent. And as opposed to bank financing, invoice factoring is easy to obtain. 
This is how accounts receivable factoring works: 1. You sell the Reinforcing Bars to your client. You send them an invoice2. You send a copy of the invoice to the factoring company, who advances you up to 85% of its value 3. Once the customer pays for the invoices, you get the remaining 15%, less the service fee 
Factoring companies charge differently for their services, but the cost is generally anywhere between 1.5% and 3% per month. Price varies based on financing volume and on the quality of your invoices. The biggest difference betweenfactoring financing and bank financing is that factoring is very easy to obtain and quick to set up. 
Most companies can obtain a substantial line of financing in as little as 5 days. Although not widely used in the reinforced bar industry at this time, it’s an ideal source of working capital that is quickly gaining popularity.