Quick invoice factoring free#

In most cases, a factoring company requires a short application and a few documents to verify your identity/background, company structure, and customers.įast cash: Once your company is approved and your account is setup, you can typically begin funding within a few days, if not the same day. Less paperwork: Due to the above, there is typically not a need for an in-depth review of all of your financial statements. This means your approval is not based upon your credit score, profitability, length of time in business, collateral, and in some cases, background issues.

Therefore, factoring companies are concerned with your customers’ business credit. The reasons for this, as compared to more traditional forms of lending, include:Īpproval based on your customers’ creditworthiness: The factoring company will be repaid by your customer(s). Quick and easy approval: Factoring approval is typically done within 1-2 days, if not within just a few hours. It should be the goal of a factoring company to be paid as quickly as possible (according to your payment terms) for a smooth Accounts Receivable process that limits the risk to your company. Good factoring companies have strong operational procedures that track invoice status and raise alerts when needed. While this may sound limiting at first, it is designed to protect your company from customers that have a risky credit profile.Īnother way risk is mitigated is through the factoring company’s collections services. Factors will approve or reject invoices based on your customers’ credit. In this way, factoring companies have an interest in helping you limit the risk of slow-payment, or worse yet, non-payment.Ĭredit checks and analysis are a standard feature of a factoring partnership. One important thing to remember is that a factoring company’s success depends on its customers’ success. In this way, factoring is more than a cash advance on your unpaid invoices - it’s an operational tool that can also save your business money. In cases where you choose to factor all customer accounts, your Accounts Receivable operation essentially becomes outsourced to the factoring company, which may even lead to personnel savings.

Quick invoice factoring free#

Business Efficiencyįactoring companies provide invoicing and collections services that free up your company resources. You’re simply selling one asset (A/R) for another asset (cash). Rather than waiting for payment on unpaid invoices, factoring advances the cash tied up in your Accounts Receivable without taking on debt or losing equity. When cash flow shortages occur, factoring can help you overcome cash flow issues. Special projects or initiatives that require investment This may be due to factors such as:īeing denied a bank loan or access to a line of credit

Usually, the factor will then work with the end customers to collect payments, remove their fees and send the remaining income onto the company.Companies use invoice factoring when there is a shortage in the cash needed to operate the business. Depending on the business, they may take over an element of the finance function from the business and advance a proportion of the funds (in relation to the invoice value) to the company soon after invoices are sent out. A finance company (the factor) will look at the strength of the customers, the borrower and further possible security offered.

These are usually 30, 60, 90 and 120 day payment terms. In simple terms, a company will send out an invoice to a customer, who will have pre-agreed payment terms. However, the industry, size and growth trajectory of the business will all be looked at. It is typically used with smaller businesses who have little or no credit control. This allows them to have more control and most invoices are discounted when they are sent out. Invoice factoring is most typically used where the funder manages the customer collections and ledgers of the business.