You need money to run your business. Traditionally your options (loans, LOC’s, equity) for capital to run your business all require extensive measures to qualify for, take a lot of time, and impose high risk to the owner and the business.
There is a financial option however that is available to get you the money you need in days and not put you personally or your business at risk. That option is: Invoice Factoring – Invoice Factoring or Accounts receivable funding is cash now option using your sold product and or services invoices for your business customers.
Factoring refers to an arrangement whereby a factor purchases an account(s) receivable from a business at a discount to the face value of that receivable. The factor earns a fee based on the number of days that the receivable remains unpaid, i.e., the longer the receivable remains unpaid, the larger the fee incurred.
Effectively, the business is no longer dependent on the conversion of accounts receivable to cash from the actual payment from their customers, which takes place on typical 30 to 90-day terms. Businesses benefit from the acceleration of cash flow.
Today, the most common form of factoring fits conveniently in your wallet – the credit card. Each time a merchant accepts a credit card, the merchant (seller of the goods) is giving up a portion of the total sale to the card issuer (typically a bank) who in turn, eventually collects from the consumer.
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More than $1 Trillion of invoice factoring to date
Benefits of Factoring Invoices
Any company, whether starting out, experiencing a growth phase or mature in years needs good cash flow. When a business sells a product or service to a customer, that business provides an invoice stating the products or services sold and the amount the customer has agreed to pay. It is an IOU from the customer to the business. Sometimes these invoices are paid immediately but quite often they are paid anywhere from 7 to 120 days.
There are a number of benefits derived from the use of factoring:
Immediate Access to Cash
Take Advantage of Early Payment Discounts
Eliminate Overhead and Invoice Processing Expenses
Build Your Credit Rating
No Liability on your Balance Sheet
Advantages of Invoice Factoring vs. Bank Financing
Factoring is not a “loan” – it is the sale of an asset.
A loan places debt on a balance sheet, and it costs interest. By contrast, factoring puts money in the bank without creating any obligation to pay it back. Thus having more cash on hand and fewer receivables strengthens one’s balance sheet.
Loans are largely dependent on the borrower’s financial soundness. With factoring, it is the soundness of the client’s customer that matters most – a real plus for new businesses without an established track record.
Want to know more or see how easy it is to get your money this week? GET STARTED