Invoice Factoring, also known as “invoice financing”, is a quick solution to receive capital on time. It is a financial transaction in which a business sells its AR ( Accounts Receivables or Invoices) at a discount to an external financing company. This enables the company selling its invoices or AR to receive the funds much sooner than waiting the typical net 30,60, or 90. Companies can use an invoice that has not yet been paid as collateral for an advance on the amount of the invoice pending payment. Typical lenders will provide anywhere between 75-96% of the total value of the bill.
Small businesses have the opportunity to invoice a single invoice, called “spot factoring”, where they can exchange to a lender for a one time transaction. It’s not fund-seeker’s credit that lender’s focused on, rather the customer’s as they are the one providing the value in the invoice. However, the transaction between the business and lender is completely discrete, preserving any unnecessary confusion with the customer.
Why Invoice Factoring / Financing?
- There are no long waits for bill payments
- Invoices serve as collateral
- No more net 30,60,90
- Submit Invoice> Approved Invoice> Receive Funds
- 1 year in business
- $100,000 in annual income
Benefits of Invoice Factoring / Financing
- Improved Cash Flow and Working Capital
- Stop waiting 30, 60 or 90 Days to Receive Funds Due
- Quick easy process
- Accelerate cash flow by providing more available cash
- Low rates
- Simplified accounting (less outstanding charges or old accounts)
- Processing Fees as Low as 3%
- 24 Hour Funding ( Same Day depending on Vendor )
- Advanced amounts of 75-97% of the total invoice