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

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."

However, when he found The Hamilton Group--one of a new breed of factoring firms offering businesses more flexible funding than factors are traditionally known for--Knobel soon realized that this wasn't his grandfather's factor. For one thing, the Syracuse, New York, factoring firm would let Knobel pick which invoices to factor without setting any monthly, quarterly or annual minimum volume requirements. "They allow us to pick and choose whom we wish to factor and [don't] demand that all our receivables are factored," says Knobel, 44, who estimates that today he factors about 60 percent of his customers' invoices.