Top 7 Reasons why Factoring is an Effective DIP Financing Solution

Companies that undergo a chapter 11 bankruptcy restructuring have a higher chance of success if they are able to secure a financing package to help continue operations through the bankruptcy period. Bankruptcy financing, commonly referred to as Debtor in Possession (DIP) financing can be a lifeline for struggling businesses. Here are the top 7 reasons why a business looking for DIP financing should consider factoring.

1. Factoring is easier to obtain that conventional loans since it uses accounts receivable as its main collateral.
   
   
2. Factoring is quick to set up and can usually be implemented in a few weeks.
   
   
3. Factoring provides immediate liquidity by advancing funds against slow paying accounts receivable/invoices.
   
   
4. Factoring provides predictable cash flow by eliminating the uncertainty of when an invoice will be paid.
   
   
5. Factoring provides the funds to pay vendors and employees ensuring the company can continue operations during the bankruptcy period.
   
   
6. Companies that implement DIP financing solutions (such as factoring financing) have a higher chance of emerging from Chapter 11 bankruptcy.
   
   
7. Factoring financing grows with your sales, providing capital as the company's sales increase.

About Marco Terry

Marco Terry is Managing Director of Commercial Capital LLC a leading provider of debtor in possession (DIP) financing. He can be reached at (877) 300 3258.