What is invoice factoring?
An alternative option for financing your accounts receivable. With invoice factoring, your factoring company will give you money upfront while you’re waiting for payment from your client. This way, you’ll be able to continue with business as usual and not have to worry about payments.
Is accounts receivable factoring a loan?
No. The factoring company actually buys your receivables at a discounted rate, so there is no interest to repay and no new debt to keep track of.
How does invoice factoring work?
You submit unpaid invoices to the factoring company. They verify these invoices and advances the funds to your company. The factor then collects the payment from the client and gives your company the remainder of the invoice minus a fee for their services.
What types of invoices are eligible for factoring?
Current invoices, payable by another business, and unclaimed invoices.
How quickly is payment received?
Depending on circumstances, it will usually be received in 24 hours.
How much does factoring receivables cost?
Fees depend on the industry and the volume. Contact us for more information.
What is the typical factoring advance rate?
It varies by industry. The advances can be from 80% to 95%.
What are the benefits of factoring?
Factoring provides money upfront while your company waits for clients to pay their invoices. Additionally, you do not accrue any debts to the factoring company.
What’s the difference between recourse and non-recourse factoring?
Recourse factoring requires the client to pay back accounts receivable if the factoring company isn’t able to collect payment. Non-recourse factoring doesn’t require clients to buy back unpaid invoices but the factoring fee is higher.
What will customers think?
Chances are a company’s customers are already familiar with factoring and they might even use a factoring service themselves. Simply explain why you use a factoring service and the benefits it provides.