Invoice Factoring Basics

Can’t afford to wait 30 to 60 days to get paid by your customers?

One of the biggest challenges for small and mid size business owners is waiting 30 to 60 days to get paid on invoices. This can be particularly challenging if the business is in growth mode and adding customers every day. Before you know it, the business has a lot of money tied up in “Accounts Receivable” but little cash in the bank to show for it.

Going to the bank for business financing won’t necessarily help. Why? First, bankers require stringent audited financials and lots of collateral. Second, most banks are retreating from the corporate loan market, making the remaining banks very choosey on who they do business with.
Is there a solution for this problem? Yes. It is called Invoice Factoring.

Invoice Factoring enables you to turn your slow paying invoices (from good customers) into immediate cash. An invoice is a promise to pay from a customer. And an accounts receivable factoring company specializes in purchasing this type of debt.

The factor, purchases your invoices providing you with advance funds immediately. They wait to be paid, while you get to use the immediate funds to grow your business.

Who qualifies for invoice factoring financing?

To qualify for factoring, you must:

• Do business with commercial customers.
• Have a profit - or plan to have one soon.
• Have profit margins (or plan to have them) of 20% or more.

How are invoice factoring rates determined?

The receivable factoring rate or discount is determined by the following factors:

• Monthly volume
• Quality of Account Debtors/Customers Credit
• Other risk parameters

Factoring rates can range from 1.5% to 3% a month depending on all these parameters.

Interested in a factoring quote? Please click here. Prefer to speak to a professional right now? Please call 800-901-2418