What is Factoring?
Invoice factoring, also known as Accounts Receivable Financing, provides you with an advance on your invoices that will be paid in the next 30 to 90 days. Instead of waiting for your clients to pay, you get immediate working capital to run your company. Factoring your invoices enhances your cash flow and allows you to meet business expenses and take on new opportunities.
A factoring company buys your invoices and will pay you for them in two installments. The process is simple, here are the steps:
- You invoice your client and send a copy of the invoice to the factoring company
- The factoring company advances you a percentage of the invoice amount as a first installment (this amount varies)
- Once your client pays, the factoring company rebates the remaining percentage of your invoices, less the factoring fee
If this sounds like it would be beneficial to your company, please feel free to contact us and let us get you back to doing what you do best!
Why Factor?
Invoice Factoring Benefits provides you with the ability to meet your “cash flow needs immediately!” Loans require collateral limited by your hard assets. Invoice Factoring is NOT a loan, so there is no debt to repay. This enhances the financial ratios often used to determine your credit worthiness in obtaining other types of financing. It also makes your balance sheet more attractive and your financial position is strengthened. Business owners often spend more than half of their time on duties they do not find productive, such as collections, administration, bookkeeping, warding off creditors and searching for additional capital. Factoring helps eliminate this wasted time. Another benefit is that ownership percentages remain unchanged with a invoice factoring arrangement (unlike considering bringing in new partners with capital).