In the tough, unforgiving world of free market, capitalistic economics, to be a small business owner is to place yourself at a great deal of stress and heartache indeed. The reasons for this are legion, and the great irony is that despite the fact that the entire nature of capitalism is such that it needs a certain level of competition to thrive and grow, it also manages to stifle it under its thumb. The reason for this is due to the fact that the average small business will find that they are alienated and excluded from the reliance upon the conventional sources of business finance.This is due to the fact that as far as the banks and other commercial lenders are concerned, a business represents a very high risk venture indeed and as such then, this means that the bank is taking a major gamble if they were to permit a loan to be awarded. Even if the bank does agree to lend a loan to a small business owner, the business owner had best be prepared for a series of very demanding and arbitrary terms and conditions which will ultimately limit the growth of their business as well as reduce their profit margins.This is especially true in the case of “angel investors” who are infamous for demanding that the small business owners that they intend to lend money to will provide them with a major degree of equity in the business. Such an astronomically high demand means that the small business owner will have their power base diluted, as well as their profit levels.With that in mind then, small business factoring may very well be the answer to all the prayers of the average small business owner who still wishes to retain as much control over their business as is reasonably possible.The manner in which business factoring works is extremely straightforward indeed. The small business will sell the invoices that that have money owed on them by customers, and where payment has not yet been made. The factoring agency, i.e. the company responsible for the small business factoring will take the invoices and ensure that they are the ones that are responsible for the collection of the money owed by the customer.For a business that has just been founded and which is struggling with capital and cash flow problems, this means that one of the most tedious, time consuming and expensive processes of the business will be dealt with in hand and with a great deal of success. Because it is the factoring agency that is responsible for the collection process, this means that the business owner will not be required to actually hire administrative staff solely for this purpose.This in turn can quickly add up to a very substantial saving indeed, as the business owner need not worry about the payment of salaries, the provision of childcare or healthcare insurance bonuses, or even office space for their employees to work in.