Invoice Financing Company for Small Business
Why Bankers Factoring is the Best Invoice Factoring Company for Small Business
Small Business Payroll Funding through A/R Financing
Small business invoice factoring, or A/R factoring, is a commercial funding facility created when a small business sells its good but unpaid invoices. Invoice factoring is a simple solution that allows business owners to fight through slow-paying customers and create sustainable cash flow.
Small business factor financing for the not yet bankable small businesses struggling with cash flow.
How can I finance my small business without creating balance sheet debt?
A recent Alignable survey found that 47% of small and medium-sized businesses are at risk of closing this fall. The factors driving cash flow crunches for small businesses stem from extreme economic circumstances. With record inflation, consumer and producer prices are increasing. With rising US interest rates, receiving conventional loan financing is not as attractive.
Small businesses rely on consistent cash flow to pay their employees and vendors and to produce sales. The cash flow struggles for startups and small businesses widen with each period business owners go without startup financing.
Small business factoring can help small businesses keep their operations active by selling unpaid accounts receivable invoices for working capital. Invoice factoring is a simple solution that allows business owners to fight through recessions and create sustainable cash flow.
Small Business Factoring
Small businesses extend 30, 60, and 90-day credit terms to commercial customers to generate business. These extended payment terms strain the small business’s weekly and bi-weekly payables. Small business invoice factoring injects liquidity into startups by turning unpaid invoices into same-day working capital.
Small businesses are different from major corporations with strong balance sheets, cash reserves, and an abundance of resources at their disposal. Startups and small businesses are typically family-owned or have a couple of founding members. It is inevitable for small businesses to need cash flow financing.
Bankers Factoring specializes in small business factoring. Complete an online funding application to begin the factoring finance process. Our owner-employee team helped small businesses navigate uncertain economic environments through COVID and the 2008 market crash.
Learn more in our previous article, “Startup AR Financing.”
What is small business invoice factoring?
Small business invoice factoring, or AR factoring, is a commercial funding facility created when a small business sells its unpaid invoices. By selling unpaid AR invoices, the small business receives immediate working capital to finance their business. Small business invoice factoring provides liquidity without taking on debt or giving up equity in your startup.
Small business factoring differs from SBA Loans or more conventional commercial financing. In particular, invoice factoring is designed to benefit the not-yet bankable or a financially distressed business owner.
Learn more in our previous article, “What is invoice factoring?“
How does small business invoice factoring work?
Small business factoring is relatively simple and process. We can provide same-day funding with a completed application and supporting documentation. Traditional debt financing takes months for approval and funding. With small business factoring, your business can receive funding this week.
Small business factoring has a couple of core requirements to begin the funding process:
- Unpaid invoices to a creditworthy commercial business or government entity
- No liens against your A/R’s or business assets – unencumbered invoices
- No significant legal or tax issues
- Completed funding application and required documentation
Once our potential clients submit their applications and paperwork, the funding process is swift. Small business factoring follows the same steps as traditional invoice factoring:
- Small business or startup sells a batch of open invoices to Bankers Factoring
- Bankers Factoring approves the small business factoring application
- Bankers Factoring deposits up to 93% of the total invoice balance the same day as approval
- Bankers Factoring rebates the remaining AR balance less our factoring fee once the account debtor pays the invoice.
Learn more in our previous article, “Startup Funding with Factor Finance.”
What are the advantages of small business factoring?
Small business factoring provides a quick financing process for companies in a cash flow crunch. Fast funding depends on the customer’s (account debtor) creditworthiness and benefits the not-yet bankable small business. Invoice factoring helps enterprises regain control of their finances and business performance.
- Quick funding: we provide same-day AR factor financing to small businesses. Small business factoring funds are used for weekly payable runs.
- Payroll funding: small businesses waiting two months for payments lack the cash reserves to pay employees on time. Small business factoring provides payroll funding to support growth and current operations. Learn more in our previous article, “Small Business Payroll Funding.”
- No debt financing on the balance sheet: small business factoring provides a cash flow facility without balance sheet debt. Small businesses lacking financial strength cannot afford the new debt.
- Competitive rates starting at .95%: small business factoring rates start at .95% per 30-days. Invoice factoring makes sense for startups compared to costly Merchant Cash Advances (MCAs) or high-interest debt.
- Flexible financing solution with unlimited access to working capital: small business factoring is a flexible cash flow vehicle that grows with your business. When startups grow their monthly receivables, their access to monthly funding increases with improved rates.
Small Business Factoring Example
A small business called Company ABC provides goods and services to a commercial customer (the account debtor). Each month Company ABC invoices at least $50,000 for delivered goods. Company ABC extends NET30 payment terms. The small business completes the invoice factoring application with Bankers Factoring.
Bankers Factoring conducts the invoice factoring due diligence process. The small business factoring agreement consists of the following terms:
|Initial Cash Advance (90%)||$45,000|
|Factoring Fee (per 30 days)||1.50%|
Assuming the account debtor pays on time Company ABC can expect two cash disbursements. First is the initial cash advance of $45,000, which is a 90% advance of the total AR value. The second and final disbursement is the rebate or discount, which is the remaining balance less the 1.50% fee. In this example, the rebate is $4,250; Company ABC received $49,250 in total cash funding throughout this factoring transaction.
Bankers Factoring Small Business Factoring
Bankers Factoring Small Business Factoring helps startups fight recessionary pressures with cash flow financing. With Bankers Factoring, our Startup Non-Recourse AR Factoring service protects our clients against economic downsides. We provide AR Insurance to cover our clients from customer bankruptcy, insolvency, and protracted slow pay.
We provide a protected cash flow solution to Bass Pro Suppliers with access to unlimited working capital. If your business has resorted to costly Merchant Cash Advances (MCAs) in the past, we are here to save you.
- Access to Unlimited Working Capital
- Up to 93% Total AR Balance Cash Advance
- Factoring Rates .95-1.60%
- A/R Insurance
- Cash Flow Management
- Outsourced A/R Management
- Same Day Funding
- Small Business Payroll Funding