What is Invoice Factoring

Invoice Factoring by definition, is the purchase of invoices (accounts receivable) at a discount rate for immediate cash. When a Business provides a service or sells a product to a customer, The Business produces an invoice detailing the service or products purchased. The total on the invoice is the amount the customer has agreed to pay.Sometimes invoices are paid quickly and sometimes they are paid over time.

Invoice Factors are Businesses who pay cash now to receive the future payments on a clients invoices. Factoring is not a "loan", it the sale of an asset (your invoice). A loan places a debt on the balance sheet and costs interest. Factoring puts money in the bank and is not considered a debt. Factoring actually strengthens your balance sheet

Factors do not lend money, they purchase invoices. A bank makes a loan to you based on "your" creditworthiness. Factors will advance you 70-85 % of a customers Invoice based on the "Customers" creditworthiness.

Factoring is an excellent vehicle for expanding a business. It may be the only means to grow your business when a traditional loans are not available.

A good rule of thumb is that if your gross margins are atleast 15% and your business is growing 20% per year or could if it had proper cash flow, you should consider invoice factoring.

Top Five Reasons to Factor:

• Rapid Advances for your invoices, usually within 1 day
• Take Supplier Discounts for early payment.
• Funding is based on the creditworthiness of your customers    
• Unlimited Cash Flow - Your credit line grows as your sales grow.
• No obligations and No binding contracts

For a FREE Consultation, please call us at (800) 954-0012