Selling Invoices to Increase Working Capital
Sell Your Accounts for Fast and Safe Cash Flow
Selling Receivables Summary
Receivable factoring is a form of business financing that eliminates cash flow funding issues for companies extending credit payment terms. Accounts receivable (A/R) factor financing provides immediate cash funding for companies lacking cash reserves or working capital by selling invoices or accounts.
A/R Factoring Business Funding
With 20% of businesses failing in year one and over 50% failing within 5-years, small business financing is a significant obstacle to company longevity. With current economic pressures on inflation, rising interest rates, and declining GDP, cash flow struggles can hurt businesses during a recession. Bankers Factoring customizes receivable factoring financing for companies extending credit terms to their customers without sufficient capital.
A/R financing through invoice factoring injects cash flow caused by slow-paying customers. Businesses can better manage finances with a 13-week cash flow (TWCF) model and consistent funding from Bankers Factoring. Keep reading our previous article, “Ready Your Business for a Recession: Create a 13–Week Cash Flow Forecast.”
Factoring invoices, receivable financing, and invoice funding require businesses to sell accounts receivables for cash flow. Receivable factoring financing enhances credit capabilities for small businesses, startups, and entrepreneurs. Keep reading “Why Sell Your Accounts Receivable?”
In this article, we cover:
- What is receivable financing, and how does it work?
- Steps in the receivable factoring process
- AR Invoice Funding
- AR Invoice Funding: What you need to know
- Commercial Financing with AR Factoring Financing
What is receivable financing, and how does it work?
Receivable factoring financing is when a business sells unpaid AR invoices in exchange for fast working capital. Selling accounts receivable is a standard financing method called invoice or AR factoring. Receivable factoring financing does not require the same strict underwriting and qualifications standards as traditional banks and financial lenders.
Financing AR invoices is possible through selling open receivables, which provides debt-free financing. Factoring financing is not a business loan that requires monthly interest and principal payments. Receivable financing can be considered a cash flow accelerator when offering customers extended credit terms.
Receivable factoring works by cash-advancing clients based on their AR value and customer credit. Businesses ready to secure a working capital injection can complete an online funding application to begin the 3 to 5-day financing process. Our Same Day AR Factoring provides up to 93% cash advances.
Steps in the receivable factoring process:
- Submit an online funding application
- Receive your factoring financing line approval within 3 to 5 days of applying
- Bankers Factoring funds up to 93% of AR value directly into your bank account on the same day as approval.
- Bankers Factoring rebates the remaining open balance less our factoring fees once the customer (Account debtor) fulfills payment obligations.
Learn more in our previous article, “What is Invoice Factoring? How Does It Work?”
A/R Invoice Funding
Most sales to commercial customers take place with credit payment terms. Extending credit terms through AR financing allows your customers to pay 30, 60, or 90-days after rendering services or delivering goods. Extended payments are part of the agreement to do business with large commercial customers such as Big Box Retailers and Government Entities.
AR Invoice Funding eliminates the burden placed on businesses lacking cash reserves or financing to support extended credit terms. AR invoice factoring financing enables our customers to offer payment terms while meeting weekly cash flow requirements. Invoice funding financing provides working capital for payroll funding, suppliers, and overhead expenses.
AR Invoice Funding: What you need to know
How to Qualify for Invoice Factoring
Qualifying for AR factoring depends mainly on the creditworthiness of your customer, the account debtor. Commercial customers typically have good credit and make factoring invoices an easy cash flow solution.
How Much Does It Cost to Sell Invoices?
Factoring fees are based on the volume of invoices, amount of financing, and overall risk of the agreement. Bankers Factoring fees start at .9% per 30-days, which includes bad debt protection.
What are the Advantages of Selling My Accounts?
AR factoring financing provides fast working capital for not yet bankable businesses. Factoring invoices offer a consistent cash flow line without taking on balance sheet debt. Startups and small businesses qualify for receiving factoring financing. Factoring is a flexible funding tool that grows as your monthly receivables grow. Bankers Factoring takes the Credit Risk.
Keep reading to learn the “Pros and Cons of Factoring AR.”
Commercial Financing with AR Factoring Finance
AR invoice factoring is a financing vehicle that enables clients to leverage unpaid customer invoices into cash. Factoring delivers immediate financing, bridging cash flow gaps between business operations and liquidity.
After our clients deliver products or services to their customers, they send Bankers Factoring the invoice to receive cash flow funding. Bankers Factoring purchases the unpaid receivables in exchange for two cash disbursements. Receivable factoring helps acquire more customers, grow sales, and unlock new market potential.
Factoring invoices helps bridge commercial financing gaps in some common scenarios:
- Long or unpredictable collections times
- Uneven or inconsistent payment disbursements
- Start-Ups have Few Choices
- Weekly or bi-weekly payroll funding
- Seasonal business demands
- Government contractors
Factoring financing is more accessible than applying for a business loan or line of credit with conventional banks. Factoring requirements are simple and enable businesses to secure fast funding and working capital. Contact Bankers Factoring today if your company has commercial customers and is free lien or encumbrances.