Invoice Factoring for US Companies Owned by Non-US Citizens
Table of contents
- Invoice Factoring for US Companies Owned by Non-US Citizens
- A/R Funding with Non-US Citizens Company Ownership
- Invoice Factoring for US Companies with Foreign Ownership
- Invoice Factoring for Non-US Citizens
- US Factoring for Foreign Ownership
- What are the costs of Foreign Ownership Factoring?
- Three simple steps for factoring services account setup:
- US Factoring Foreign Owners – Import and Export Factoring Example
- Bankers Factoring Foreign Ownership Factoring Services
- Ready for the owner-employees of Bankers Factoring to help you grow your US-based company with our award-winning invoice funding, including bad debt protection? Use our fast online factoring application or call the toll-free number 866-598-4295
A/R Funding with Non-US Citizens Company Ownership
Factoring for Foreign Owners in the US
Foreign Ownership Factoring helps businesses in cash flow crunches obtain fast working capital even with non-US ownership. Factoring Invoices or Selling invoices eliminates the Net 30, 60, or 90-day Selling Terms for customer payments. When your US company utilizes factoring services, you have working capital to cover payroll funding, operating expenses, and out-of-scope costs. A/R Funding with Non-US Citizen Company Ownership is the answer.
In addition, Foreign-owned United States (US) company factoring is a funding vehicle for non-US citizens to finance receivables in their domestic US business. Business owners that do not live in the United States but have a local US company with local US customers can finance their business through invoice factoring.
Complete an online funding application to receive 80 to 93% cash advance within 3 to 5 days.
Invoice Factoring for US Companies with Foreign Ownership
Foreign ownership factoring is a form of financing available to non-US citizens with an established US entity. This means you do not need to live in the United States to operate a US business and qualify for factor financing. Foreign ownership factoring allows companies to sell invoices from US customers to a factoring company for cash flow funding.
Additionally, keep reading our full article, How To Finance Your US Subsidiary through A/R Financing.
Invoice Factoring for Non-US Citizens
Factoring invoices allows non-US citizens with domestic companies to finance accounts receivable (A/R). Invoice factoring, or A/R factoring, is a commercial finance service where companies sell open invoices in exchange for debt-free working capital.
International organizations can enhance domestic cash flow by accelerating the receivables cycle. In addition, Non-US citizens with a US company secure reliable financing through invoice factoring.
Bankers Factoring Positives Include:
- No balance sheet debt
- Receiving funding within 3 to 5 days after your application
- US companies with US accounts receivables can obtain working capital
- Foreign business owners can stop cash flow obstacles
To clarify, read our full article, Business Financing through Receivable Factoring.
US Factoring for Foreign Ownership
US Factoring services enable foreign owners to fund their US business with unpaid invoices from domestic enterprises and government entities. This helps business owners in different countries secure cash flow financing for their US operations without debt. US Foreign Ownership Factoring provides multinational organizations with commercial funding without giving equity.
Keep reading our full article, How To Finance Your Business Without Giving Up Equity.
What are the costs of Foreign Ownership Factoring?
US factoring companies offer different factoring services which impact your rates, fees, and total cost. Factoring rates depend on your business operations and customers’ size, scope, and risk.
The two types of factoring services are recourse and non-recourse factoring. Firstly, recourse factoring means your business takes the risk from receivables default. Secondly, non-recourse factoring, the factoring company takes on credit risk providing your bad debt protection. Non-recourse factoring strengthens cash flow reliability if your customers become bankrupt or cannot pay invoices.
Breakdown of factoring expenses:
- The factoring rate: also called the discount rate, is the rate you pay to obtain working capital.
- The factoring fees: each company has different expenses for wire transfers, administration, processing, and other back-office services.
- The cost of factoring: the total cost of factoring is your discount rate percentage plus any fees incurred during the transaction
Keep reading the full article, Factoring Fees and Rates Explained.
How is US foreign ownership factoring treated for tax purposes?
US tax reporting for foreign ownership factoring comes from IRS Internal Revenue Code (IRC). In short, if you sell your invoices to a factoring company, the amount received is reported. On the other hand, if you keep ownership of your A/R and only receive cash advances, the advances are not typically taxable income.
The IRS assesses many criteria, including your business location, factoring company location, and the factoring agreement in place. Determining taxable income in factoring transactions is essential to avoid tax avoidance or evasion. Please get experienced foreign tax professional help.
Keep reading the full article, Journal Entries for Factoring Receivables.
How do I set up Invoice Factoring services for Non-US Citizens?
Invoice factoring services provide an easy means to obtain commercial funding for multinational businesses and foreign owners. The two main criteria for non-US citizen factoring are an active US company with open invoices from creditworthy US businesses.
There must be no existing liens against your receivables or business assets for account setup. This is also referred to as unencumbered invoices. Foreign owners can live in their home country while conducting US operations with domestic financing.
Three simple steps for factoring services account setup:
- Complete an online funding application with the 8 Requirements To Qualify for Invoice Factoring.
- Receive your proposed factor financing agreement within 3 to 5 days
- Sign the factoring agreement and receive 80 to 93% of your total A/R balance the same day
US Factoring Foreign Owners – Import and Export Factoring Example
Suppose you are a non-US citizen living overseas with a US-based importing company. Your company is registered with the local Department of State and sells goods to commercial customers throughout the US. Foreign business owners sell directly to big box retailers or other domestic entities with solid credit.
For example, your company has $100,000 worth of unpaid invoices and needs funding to cover upcoming payroll funding and operating expenses. You decide to sell your receivables to Bankers Factoring for fast working capital.
Upon approval, the factoring company extends a non-recourse offer with an 85% cash advance, a 2.0% discount rate for the first 30 days, and .005% per day after. The same day you sign the agreement, your US company receives an $85,000 direct deposit. Once your customers pay their invoices in full, we release the remaining $15,000, less our $2,000 factoring rate.
The foreign-owned US entity receives $98,000 in total cash funding, paying the factoring company $2,000 in rates.
Bankers Factoring Foreign Ownership Factoring Services
Bankers Factoring is one of the few Foreign Ownership Factoring companies extending non-US citizens commercial A/R financing opportunities. Foreign-owned US entities can improve cash flow, reduce bad debt risk, and grow their business with invoice factoring services.
Bankers Factoring also provides bad debt protection to ensure our clients have reliable cash flow. We offer a fast-funding process with no strings attached or hidden fees. Within five days, your US entity can receive up to 93% cash advance of your invoice value at a reasonable factoring cost.