Why Sell Your Invoices to a Factoring Company? Safe Working Capital.
Table of contents
- Why Sell Your Invoices to a Factoring Company? Safe Working Capital.
- How Does Invoice Factoring Work?
- A Factor Buys Receivables
- Sell Accounts for Working Capital
- Same-Day Funding with Bankers Factoring.
- How Do Factoring Companies Buy Accounts Receivable
- Another important part of the factoring process is a Notice of Assignment.
- What is a Notice of Assignment?
- How Does Bankers Factoring Provide Protection From Bad Debt?
- The Benefits of Non-Recourse Factoring.
- Ready to Sell Your A/R Invoices And Get Cash Flow Now?
When companies are stuck with 30-90 selling terms, need the cash flow, and invoice factoring fills these gaps. Factoring companies provides immediate working capital. Factoring companies that buy accounts receivable, such as Bankers Factoring will provide immediate funding.
How Does Invoice Factoring Work?
The factoring industry in the United States is a rapidly growing market, and according to a report by Market Data Forecast, the compound annual growth rate (CAGR) is expected to grow at a rate of 9.2% from 2021 to 2026. As a strong industry that is continuing to prosper, the invoice factoring is a great way for businesses to relieve financial stress and improve cash flow.
A Factor Buys Receivables
After a business has provided its customer with goods or services, the customer receives the invoice. These invoices are often on 30 day to 90 day payment terms. When businesses want their cash now, they can sell the invoice to the factoring company. The factoring company will verify the invoice and provide same-day funding to the business with a cash advance up to 80-93%.
Sell Accounts for Working Capital
The invoice is now in the factoring company’s hands, and they will go directly to the customer and collect the payment on the total amount due. Once the payment from the customer is made and the money is collected by the factor, the factoring company will issue the rest of the balance of factoring reserves to the business.
Learn more about business factoring.
Same-Day Funding with Bankers Factoring.
When selling receivables to Bankers Factoring, we always makes sure to provide same-day funding as soon as your account is set up. We have flexible and cost-efficient factoring services that you can enjoy. Since we are named Best Factoring Company by FactoringClub in both 2022 and 2023, we always make sure to provide solution. Furthermore, when businesses are having trouble meeting payroll, turned down for bank loans, and need to keep their working capital flowing we are here to help.
How Do Factoring Companies Buy Accounts Receivable
How Factoring Companies Buy Accounts Receivable.
- Submitting an application
The business seeking factoring services submits an application to the factoring company. This application includes important documents and information about the business, its invoices, and its customers.
- Performing due diligence and approval
The factoring company now begins due diligence with the business and the customers. This is a simple process that checks the eligibility of your business and whether your customer is in good credit standing. When this is completed, the application will be approved, and a factoring agreement will be offered.
- Submitting invoices
The business now submits its invoices to the factoring company, and the factoring company verifies these invoices with the invoice verification process. After the invoice is verified, the factoring company will now buy the A/R invoice and provide the cash advance.
- Collection from the customer
The responsibility of collection from the customer is now up to the factoring company. They will directly collect the payment from the customer. Once this process is complete, the factoring company will issue the remaining balance to the original business, less its fees.
Learn more about the costs associated with invoice factoring, and how Bankers Factoring offers the best factoring rates with no hidden fees.
Invoice factoring provides businesses with working capital now and remedies the headache of having to wait 30-90 days. A survey by the Commercial Finance Association found that over 85% of respondents reported growth in their factoring portfolios in 2019. This demonstrate that factoring services are in increasing demand.
You can also read our article why sell your accounts receivable.
Another important part of the factoring process is a Notice of Assignment.
What is a Notice of Assignment?
A Notice of Assignment (NOA) occurs at the beginning of a factoring transaction and used by every factoring company. It is a legal document that informs the customer or account debtor that their owed invoice assigned to a factoring company. This will ensure that the customer knows to who made the payment.
The Information Included in a Notice of Assignment.
The Notice of Assignment will often include the information listed below.
- The factor’s name, address, phone number, and email.
- The business’s name and address.
- The invoice number, invoice date, and amount of the invoice.
- The services is complete
- Purchase Orders and any needed accounting document backup
- The invoice’s due date.
- Instructions for the customer to make the payment.
The Notice of Assignment guarantees that the customer is legally needed to complete the payment to the factoring company, and that the factoring transaction is smoothly completed.
How Does Bankers Factoring Provide Protection From Bad Debt?
Bankers Factoring utilizes “non-recourse factoring,” a type of factoring that provides bad debt protection. Meaning that if your customer is unable to pay their outstanding invoices, we will absorb this risk.
According to Dun & Bradstreet, 36% of small and medium-sized companies in the United States experienced bad debt and financial trouble. This is all due to nonpayment and slow payment in 2019. In the event that a customer files for bankruptcy or continue to recieve slow pay, you can take these worries off the table. You can rest easy knowing that Bankers Factoring is taking on the credit risk for you.
The Benefits of Non-Recourse Factoring.
As a non-recourse factoring company, Bankers Factoring provides protection from bad debt, improved cash flow, low credit requirements. There is no need for a credit insurance policy, and access to our decades of experience and knowledge. We are able to assist your business with the help it needs to grow and thrive.
Ready to Sell Your A/R Invoices And Get Cash Flow Now?
The factoring application process is fast the factoring invoice process is simple. Let Bankers Factoring worry about the payment due date and you grow your business with unlimited working capital. No more requesting payments from your customer’s accounting department.
Fill out our fast online factoring application now, and receive award-winning A/R factoring from the owner-employees of Bankers Factoring.