Factoring

Why wait till you get paid for work you’ve completed or product you’ve shipped when you can gain access to the funds now? Don’t wait for your clients to pay their outstanding accounts. Leverage factoring to get the cash you need to bring in supplies and pay expenses. 

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What is Factoring?

After delivering a product or service to a client, it usually takes some time before you receive payment. This wait time can strain cash reserves as you cover costs of fulfillment. Regardless of when payments are scheduled, you need to cover costs such as utilities and payroll. That’s where factoring comes in. Factoring is the sale of your business’s account receivable assets for cash. You sell your invoice, purchase orders, and contracts to a company called a “factor,” and in turn, you get a lump sum payment upfront.  

Factoring eliminates the wait time between invoicing and payment. Without having to wait the 30 to 90 days it usually takes for clients to pay their outstanding accounts, you can get the funds you need to keep your business moving. When the client is ready to pay, they pay to the factoring company who recovers the advance they factored plus a factoring fee, and sends you the rest of the funds. This financing option is an excellent way to manage short-term financial obligations without adding debt to your balance sheet. 

Small Businesses

Factoring is a great option for small businesses. With factoring, you don’t have to worry about new or damaged credit. Talk to us today and get the funds you need to develop without putting any burden on your business.

Contractors

As a contractor, you will constantly need to fulfill contracts that require a great deal of resources. Utilize your contracts to get financing to handle the costs of materials and supplies while you await payment on a purchase order.

Healthcare Providers

With factoring, you can avoid the time it takes third-party vendors like insurance companies to settle accounts. Utilize factoring to get a jumpstart on managing your expenses.

Advantages of Factoring

 

  • Get quick cash to reinvest in your business. 
  • Avoid paying interest. 
  • Avoid the hassle of collecting debts. 
  • Keep your balance sheet debt-free. 
  • Secure financing with a low credit score. 
  • Factor as many or few accounts as you want. 

 

Frequently Asked Questions

When is Factoring not a good fit?

If your business doesn’t operate via invoicing or purchase orders, factoring is not for you. Companies that get paid upfront for goods and services won’t have AR to factor. If you own such a business and need financing, we can help you find other financing solutions to suit your needs. 

How many accounts can I factor?

There is no specific number of accounts you have to factor. However, some factoring companies have a minimum dollar account. If you need a factoring option without limits, we can connect you with a firm that fits.

Does a factor affect client relationships?

Usually, the only contact required between your factor and your clients is a simple instruction on where to send payment. However, different factors interact with clients differently. If you need a factoring company that will keep contact with your clients minimal, we know just the right ones.

Does Factoring require good credit?

Your business’s credit score doesn’t really matter to a factor. Clients are the ones who repay the advance, so their history of reliable and on-time payment matters is more important.

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