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What is Invoice Factoring? An Overview

Invoice factoring is a multibillion-dollar industry, which continues to play a significant role in business finance. By using invoice factoring, businesses can now cover rapid growth costs, cash flow shortages, and other expenses while growing their business.

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What is Invoice Factoring? An Overview

  1. 1. What Is Invoice Factoring? An Overview An overview of invoice factoring and how it can help your business.
  2. 2. An Overview of Factoring Invoice Factoring is how small- to medium- sized businesses can get cash quickly to cover payroll, pay their vendors, improve cash flow, make a major purchase, or expand into a new territory.
  3. 3. How Does Invoice Factoring Work? 1. A company sells its current invoices to an invoice factoring company for immediate cash (in 24 hours). 2. The factoring company collects payment from the client. 3. The company is able to proceed with business without worrying about gaps in payment.
  4. 4. What is the difference between Non-Recourse and Recourse? Non-Recourse Factoring: The factoring company takes on all the risk of non-payment if a customer is enable to pay.  Higher rate  No risk (avoid costs associated with extending credit and collecting bad debt) Recourse Factoring: The company sells its invoices with the understanding that they will buy them back if unpaid.  Lower rate  Costs associated with extending credit and collecting bad debt
  5. 5. How Does a Business Qualify for Factoring Services?  As long as a business has monthly invoices from reputable clients, it’s a candidate for invoice factoring.  Unlike banks that require long applications, factoring relies on the creditworthiness of a business’s clients.  If a client is established and has a history of paying their bills on time, the business more than likely qualifies.
  6. 6. How Long Does the Invoice Factoring Process Take?  Filling out and submitting an application can be done in 20 to 30 minutes.  Once the client’s credentials have been verified, the factoring company can provide cash right away (in 24 hours).  Invoice factoring companies are built around expediency.
  7. 7. Discover More About How Invoice Factoring Works  Haven’t heard much about accounts receivable factoring? No problem. Our invoice factoring experts are happy to introduce you to this traditional business financing practice. Contact: Business Factors & Finance at 888-659-0528  A small business financing expert can help you understand how it all works, plus explain the benefits of factoring receivables.  They can answer your questions about the application process, qualifying your clients, how much it will cost, when you can get your money and more. No cost to apply! Contact us today!

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