One of the obvious benefits of utilizing an invoice factoring company is to help your business maintain a positive cash flow. I read a blog post today that identified scenarios whereby factoring receivables may provide asset protection and offer tax advantages.
I’ll avoid repeating all of the details here, but the blogger presents a scenario whereby a doctor with a successful medical practice protects his assetts from potential lawsuits by “selling” those assets to an invoice factoring company. Since the practice no longer owns the receivables they are no longer subject to recoupment as part of an insurance settlement.
The author also outlines the circumstances by which this physician creates a favorable tax situation by using the factoring to fund insurance coverage.
