Accounts Receivable Factoring
Don’t wait weeks or months for clients to pay their outstanding accounts when you could have cash in hand today. Bring in supplies, pay expenses, and handle unexpected debts by leveraging your AR with factoring. We’ll show you how easy it is.
What is Factoring?
Factoring is the sale of a business’s accounts receivable to a company called a “factor.” That company gives the business a lump sum payment for its accounts. Then, the business’s clients make their payments directly to the factor. The factor collects what they’re owed, plus a small fee, and forwards the rest on to the business.
Factoring eliminates the wait time between invoicing and payment so that your business can continue to move forward without delay. Some businesses wait 30, 60, or even 90+ days to get paid on outstanding accounts. Meanwhile, materials and labor are needed to satisfy other client orders. Utilities and payroll need to be taken care of on time. Don’t be stalled by slow or late-paying clients. Utilize your AR and get the money your business needs to keep moving.
Factoring For:
Accounts Receivable
Accounts Receivable are part of your working capital, but because they are debts owed to you, you can find yourself with a high working capital calculation without cash in the bank. By selling accounts receivable to a factor you access immediate cash while the factor takes over collecting payment from your client.
Invoices
You can sell an invoice to a factoring agency as soon as it is submitted to your client. For service industries, invoice factoring often opens up the cash to hire teams to tackle new clients and new challenges.
PO Contracts
Purchase orders and short run high ticket contracts, common in construction, government contracting and supply chain management, are often fulfilled through funds provided by a factor. Lean organizations working with just in time delivery will utilize contract factoring to deliver on high value purchase orders.
Fast
Invoices and purchase orders can be factored quickly. There are no long application processes and your business’s credit isn’t a concern. Once your clients check out with the factor, you’re good to go.
Convenient
Upload documents and see incoming payments online as soon as they’re processed. Connect your accounts for fast money transfers. Once you’ve factored one client’s account, it’s easy to factor invoices for that client in the future.
Debt-free
Factoring is not a loan. It’s considered the sale of an asset and therefore doesn’t count as a debt. As long as your clients pay their invoices on time, you don’t have anything to repay. We can match you with a factor today.
Advantages of A/R Factoring
- There’s no debt added to your balance sheet.
- Get immediate financing.
- Let someone else handle collecting.
- Don’t worry about new or damaged credit.
Frequently Asked Questions
When is Factoring not a good fit?
Not all businesses have invoices or purchase orders they can factor. If your business gets paid upfront for goods and services, you won’t have accounts receivable to factor. We can connect you with multiple financing options that don’t require AR.
Can I factor multiple invoices?
Yes, you can factor several invoices for the same client or combine different client invoices. You’ll want to make sure the total value of the accounts is worth financing. Let us help you with examples.
Will the factor contact my clients?
Most clients don’t notice when you use a factor. They may receive payment instructions from the factor but most have minimal contact with your clients.
How much will it cost to factor my business’s accounts receivable?
Factoring fees are generally a low percentage of what the total factored amount is. Most factors charge from 1% to 3%.