Invoice factoring is an extremely useful tool for financing. It is an option that every small and medium-sized business owner should know about. If you are confused by the terms accounts receivable factoring or invoice factoring and want to know more about this type of funding, and then this article is for you.
What is Invoice Factoring?
The invoice factoring option allows businesses to sell their outstanding invoices for instant cash. The financing companies that buy these invoices get paid when the business’s customer pays the invoice.
Businesses can get up to 95% of the value of the invoice, and the financing company receives the difference as a fee. Your customer makes the payment to the factoring agency on the terms you already have in place with them – the only thing that changes is the payment address.
Who is it for?
Invoice factoring is ideal for businesses facing a cash crunch because of late payments from their clients. For example, an auto parts manufacturing company has delivered a fresh consignment to their client, but the payment for the same is slotted a month or two later. Meanwhile, if they need cash-in-hand to get immediate cash to re-invest in the business or pay their own dues, they can sell these invoices to a factoring company for immediate liquidity.
- It is useful when you have an immediate need for funds
- Ideal for helping through tight cash flow situations
- Can also be used to reduce cash flow volatility caused by late-paying customers
- Useful for credit building and credit or background verification
How does the process work at Money Matters Now?
- Get in touch and open an account with our team. You will need to submit your unpaid invoices to us. These invoices must be for completed work orders or delivered products.
- Based on the creditworthiness of your customer, you will be offered competitive terms and fee structure. You could be offered anywhere between 90-95% of the invoice amount.
- Once the necessary formalities are complete, you will receive the money in your bank within 2-3 business days.
- After that, the collection of the invoice amount will be facilitated from our side.
You can undertake invoice factoring as many times as you need. In fact, it’s a great way to keep your cash flow from fluctuating too much. Instead of waiting 1-3 months for your payments to come in, you can access capital almost instantly.
To discuss the details of the process in person, call us at 877-573-6677or email us (link).