What Makes the Best Invoice Factoring Company for a Small Business?
Questions to ask to end up with one of the best invoice factoring companies
Table of contents
- What Makes the Best Invoice Factoring Company for a Small Business?
- Factoring Company Summary
- Small Business Factoring Financing to overcome cash flow gaps
- hat makes the best small business factoring company?
- What is small business factoring?
- Why do small businesses need factoring financing?
- Reasons why small businesses use factoring financing:
- How does factoring receivables work?
- The steps in the invoice factoring for small business funding process:
- What types of small businesses can benefit from factoring financing?
- What qualifications are required for factoring?
- Invoice Factoring vs. Term Loans
- The Best Small Business Factoring Company
- Benefits of partnering with The Best Small Business Factoring Company :
- Ready for the owner-employees of Bankers Factoring to help you grow your company with our award-winning invoice funding services, including bad debt protection? Use our fast online factoring application or call the toll-free number 866-598-4295
Factoring Company Summary
The best small business factoring company, Bankers Factoring, turns unpaid accounts receivables into working capital for entrepreneurs and startups. Factoring financing also starts with an easy online application and a first funding process that takes 3-5 days. So, if your small business has unpaid invoices, factoring financing provides bad debt protection and cash funding for the not-yet bankable business. Among your many choices in invoice factoring companies, it is best to have a company that understands your industry and takes the B2B business credit risk (a non-recourse invoice factoring company) as part of their services.
The Best Small Business Factoring Company
Small Business Factoring Financing to overcome cash flow gaps
Almost 20% of startups fail in their first year due to financial mismanagement or poor financial planning. Not to mention, small businesses, startups, and entrepreneurs have different financing needs than major corporations and publicly traded entities.
So, when small businesses begin to grow their sales performance, cash flow gaps follow due to offering extended payment terms. Furthermore, small businesses struggle to secure traditional funding in their early stages. Therefore, business owners need an alternative funding source to avoid burning their life savings.
You can also read sell you invoices to the best factoring company.
Thus, the Best Small Business Factoring Company, Bankers Factoring, works with startups and entrepreneurs to resolve funding issues. Bankers Factoring has helped small businesses go from negative cash flow to growing in challenging market conditions.
hat makes the best small business factoring company?
- The fast and easy funding process
- No balance sheet debt
- Most invoice factoring companies don’t also offer PO funding.
- Bankers Factoring takes on the credit risk – we provide AR Insurance
- Financially distressed businesses can qualify
- Low factoring fees
- Same-day funding with up to 93% cash advance on outstanding invoices
- No hidden fees
- Access to unlimited working capital
What is small business factoring?
Small business factoring financing is a form of commercial funding available to startups and small businesses that are not yet bankable. Factoring financing helps small entities overcome cash flow gaps by accelerating accounts receivable (AR) payment cycles.
Small business factoring, also called factoring financing, AR factoring, invoice financing, or invoice factoring, is a standard solution for a business lacking cash reserves or working capital. Contact Bankers Factoring today and work with our small business factoring team if your business is struggling to secure financing.
Please read what is business factoring and more about factoring for small businesses.
Why do small businesses need factoring financing?
Factoring financing provides liquidity injections for small businesses that cannot obtain traditional financing, such as SBA Loans or bank lines of credit. Small companies in growth mode need additional cash for payroll funding, sales and marketing, and general expenses. Small businesses can run into cash flow shortages by extending credit terms to their customers without the available financing.
Reasons why small businesses use factoring financing:
- Bank loan turndown or funding denial
- Struggling to meet payroll
- Need to increase staffing
- Customers have extended payment terms such as NET30, NET60, or NET90
- Distressed financial situations – recent bankruptcy, IRS tax liens. Bankers Factoring Lien Solutions.
- Seasonal trends in the business cycle
How does factoring receivables work?
Factoring financing is an easy process, especially compared to conventional lending or financing. For factoring financing to be an option, your small business needs to have open AR invoices from a commercial customer or government entity.
The first step in factoring financing is submitting our online funding application. We can begin the funding process with a completed application and supporting documents. Invoice factoring provides funding through selling unpaid invoices to a factoring company, like Bankers Factoring.
The steps in the invoice factoring for small business funding process:
- Submit an online funding application
- Upon approval, Bankers Factoring buys your AR invoices in exchange for immediate funding.
- Bankers Factoring provides same-day funding for up to 93% of the AR value once you are approved.
- Bankers Factoring rebates the remaining invoice balance less our small fee once the customer (account debtor) pays the invoices.
You can also read how a factoring company works.
What types of small businesses can benefit from factoring financing?
Any small business, even start-up companies, with open invoices from commercial customers or government entities can benefit from factoring. Small companies use factoring financing in most industries to overcome extended payment terms and payroll funding. Extended payment terms are one cause of slow-paying customers. If your business has slow-paying customers or offers extended payment terms, factoring can help your cash flow.
Common industries that use invoice factoring financing:
- Oil and Gas
- Agriculture (PACA)
- Food and Beverage
- Wine and Spirits
Visit our previous article, “What Industries Use Factoring?”
What qualifications are required for factoring?
Invoice factoring qualification is contingent upon the creditworthiness of your customers or the account debtor. Funding is dependent upon your customer’s ability to repay the open invoices. The approval standards benefit small businesses lacking the credit profile or financials to qualify for traditional financing.
- Business to Business (B2B) or Business to Government (B2G) invoices
- Unencumbered invoices payable – no liens against the A/R
- Accounts receivables (A/R) aging report
- Accounts payable (A/P) aging report
- Tax returns and quarterly form 941 for payroll taxes
- Financial statements (balance sheet, income statement, and cash flow statement)
- Proof of ownership of the business
The factoring financing approval and funding process only takes 3 to 5 days for the cash to hit your bank account. Factoring financing is a quick process compared to the months it takes for traditional loan funding.
Visit our previous article, “8 Requirements for Factoring Financing.”
Invoice Factoring vs. Term Loans
Factoring funding is a form of non-debt financing for small businesses. When a small company sells its invoices, they receive working capital as compensation. Conversely, term loans are capitalized debt on your balance sheet with monthly principal and interest payments. Term loans are used for significant capital investments such as property, equipment, and other assets. Factoring financing is geared towards short-term funding needs due to the business operating cycle.
We are also one of the freight factoring companies with special start-up programs.
Other short-term small business financing forms are available but are not as robust as factoring funding. For instance, small businesses run into costly merchant cash advance (MCA) loans which tie up future earnings to repay their MCA provider. A more optimal solution for small businesses is factoring, which provides a flexible cash flow line with no repayments.
The Best Small Business Factoring Company
Bankers Factoring, One of the Best Small Business Factoring Companies, provides working capital financing, unlike other factoring companies. The Best Small Business Factoring Company takes on the credit risk of removing the burden of bad debt from your customers – this is called non-recourse factoring. Small businesses need fast working capital, which is why Bankers Factoring provides same-day factoring financing with our best-in-class invoice factoring services and non-recourse invoice financing.
Benefits of partnering with The Best Small Business Factoring Company:
- Up to 93% initial cash advance.
- Same-day funding.
- Special freight factoring company programs for trucking companies and the trucking industry.
- 3-to-5-day approval and funding process.
- Bankers Factoring provides credit protection against bad debt.
- Access to unlimited working capital.
- Special programs for start-up staffing and IT companies.
- Flexible line of financing that grows as your monthly receivables increase.
- Low factoring fees starting from .9-1.6% per 30 days.
As one of the few award-winning factoring companies of 2023, we hope your small business picks employee-owned Bankers Factoring. And remember, as your small business factoring company Bankers assumes the credit risk.