Factoring
Fast: Get paid now, not later
Easy: You don’t need a high credit score to qualify
Convenient: Access capital whenever you have AR
Affordable: Factoring costs are lower than some loans
Accounts Receivable Factoring
Lending Overview
Waiting for customers to pay their invoices 30, 60, or even 90 days after delivery is a common woe for many businesses. While you wait, expenses keep flowing in, creating financial tension and worry. Factoring is a way to get what you’re owed today, without taking out a loan. If your business has accounts receivable assets, you can leverage their value to get an influx of capital ahead of customer payment. A factoring company will buy those assets and turn them into cash. When your customer is ready to pay, they pay directly to the factor, eliminating your need to process payment or repay the funds. You can factor one large account or bundle several invoices at once to bump up the cash value. Invoices, purchase orders, and contracts can be sold for immediate cash when you need it for expenses or want to finance timely projects. Learn more about factoring from your broker.
The Funding Lane
How to Effectively Apply Funds
Factoring looks at your customer’s credit, not your own, which means if you’ve reached your borrowing limit with other creditors, you can still take advantage of factoring. Factoring is also great for start-ups with reliable clients. If your business hasn’t had time to build a strong credit history, factoring is an easy way to bring in working capital. It’s also handy for contractors with a sudden spike in demand. Instead of making your customers wait, use factoring to bring in supplies and materials right away. You can keep up with demand without having to take out a new loan. Find out if factoring is right for you by talking with your broker.
Invoices
You don’t have to wait for next month, or the month after to get paid, even if your clients delay. Factor your invoices now to get paid early. Your customer pays the factoring company directly and you don’t have to pay anything back. Factor as often as you need a capital advance.
Purchase Orders
Purchase orders are notorious for taking time to wind through the system, especially when it comes to government contracts. You can skip that time by factoring your purchase orders instead. You’ll move ahead with new orders and your customers can pay when they’re done processing the paperwork. Ask your broker how.
Contracts
Increase the volume of invoices you factor by utilizing contract factoring. This reduces the cost of financing and gives you access to more capital. You can also cut your accounts receivable costs when you factor all or most of your contracts. To learn more about contract factoring, ask a broker to match you with options tailored to your business.
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FAQ’s
We believe that the more you know, the better the decisions you make. And in the financing world, better decisions mean lower rates, better terms, and increased profitability.
These FAQs are only the start. Our team is here to answer all of your questions and support you in finding the best financing solution for your unique scenario.
Q. What is spot factoring?
Spot factoring is another name for invoice factoring. It refers to selling your unpaid invoices to a factoring company one at a time. You decide which invoices to factor and when.
Q. How much does factoring cost?
Factoring costs are low compared with other types of financing. The average factoring fee is between 3% and 5%, although most factors also charge interest, depending on the terms of your agreement. Make sure to work with a broker to get the best rates.
Q. Do I need good credit to factor my AR?
No. Since factoring is a sale of assets, not a loan, you don’t have to meet the same credit requirements. Factoring companies care more about the credit of your customers than yours. If you’re worried about your credit, ask your broker for credit repair solutions.
Q. What are the disadvantages of factoring?
With most factoring agreements, the company will charge higher interest if your customer takes longer to pay. In the event your customer requests a return or refuses to satisfy their account, you must repay the factoring company.
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Get Funded
The funding process starts with a short 3 minute online application. Our team will then review your needs and quickly provide you with a custom funding proposal that targets your desired financing types, rates, and terms.