Services Factoring Information

Selling or factoring invoices is very straight forward with 5 main steps:

Step 1 – Submit the invoice to the Factoring Company or Factor.
Step 2 – Submit POD, rate confirmation, work order, permits or other pertinent materials.
Step 3 – Factor receives payment on the invoice directly from your customer.
Step 4 – Factor releases the reserve balance to your business less the factoring fee.
Step 5 – Factor invoices of your customers.

Here is an example of how the numbers might work on a factoring transaction:

• $10,000 – Invoice Amount Customer owes Business
• $ 9,500 – Advance Rate Paid to Business (Assumes 90%)
• ​$ 500 – Reserve Held By Factor (Assumes 5%)

Invoice Paid In 30 days

• $250 – Fee Deducted from Reserve (Assumes 2.5%)
• $250 – Balance of Reserve Paid to Business
• $9,750 – Total Amount Received by Business

​The amount of the advance, reserve, and factoring fee can vary by industry, customer strength, and how long it takes the customer to pay the invoice.

Some factoring companies might charge a small one-time set up fee to the business upon acceptance.  Others will waive the set-up fee depending on the volume and length of the factoring contract. While the assumptions may vary from the example, they will always be clearly spelled out upfront in the proposal and agreement between your business and the factoring company.

Factoring provides immediate access to cash so your business can pay bills, meet payroll, purchase inventory or equipment, manage overhead, fund expansion, and increase profits.  Over the years many Fortune 500 companies have enhanced their growth using accounts receivable financing.

During the challenging economy, many banks have declined business loans or lines of credit. Factoring provides an option even when banks say no since it is based on the credit worthiness of the customers paying the invoices.  This means new companies may qualify and strong financials are not required.

These are just a few of the many advantages of selling invoices over increased debt. For more information please read the Benefits of Factoring and Frequently Asked Questions!

If you are interested in flexible cash flow solutions with accounts receivable factoring please contact us!  We will discuss your objectives, answer any questions, and forward the factoring application.  If you want to get a head start just download the Online Factoring Application!