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That's a Fact

As one of the oldest ways to generate working capital, factoring is now flexible, customizable and going mainstream.

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This story appears in the April 2007 issue of Entrepreneur. Subscribe »

Robert Knobel first heard about factoring from his grandparents, who owned a fabric business in New York City. They used factoring to convert accounts receivable into cash, bridging the gap between invoice and payment dates.

So when Knobel's banker suggested factoring for day-to-day cash flow needs for his advertising specialty business, Knobel found himself following in his grandparents' footsteps. But not without some initial reservations. For starters, he worried about the stigma attached to factoring. "I, like so many others, did not initially understand factoring," recalls Knobel, whose $5 million-plus firm, RMK Worldwide Inc., in Deerfield Beach, Florida, puts company logos on goods it imports from Asia. "Many feel that factoring is a means to receive cash faster if someone is in financial distress. I felt like I was somehow failing and could not get my dollars in fast enough."

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