Small Business Invoice Factoring

Small Business Factoring Company

Invoice Financing Company for Small Businesses

Small Business Factoring

Why Bankers Factoring is the Best Invoice Factoring Company for Small Business

Small Business Payroll Funding through A/R Financing

Factoring for Small Business Summary

Small business invoice factoring, or A/R factoring, is a commercial funding solution 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. Furthermore, the factors driving cash flow crunches for small businesses stem from extreme economic circumstances. With record inflation, consumer and producer prices are going up. 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. However, the cash flow struggles for startups and small businesses widen with each period business owners go without startup financing.

But small business factoring can help small businesses keep their operations active by selling unpaid accounts receivable invoices for working capital. Moreover, 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 close business. However, these payment terms strain the small business’s weekly and bi-weekly payables. Small business invoice funding injects cash 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 resources. In addition, startups and small businesses are family-owned or have a couple of members. So, it is inevitable for small businesses to need cash flow factoring and invoice financing.

Bankers Factoring specializes in small business funding. So, complete an online funding application to begin the funding 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 services, or AR funding, is a commercial funding facility created when a small business sells its invoices. Further, by selling unpaid AR invoices, the small business receives immediate working capital to finance its business. Additionally, small business invoice funding also provides cash flow without taking on debt or giving up equity in your startup.

Small business factoring differs from SBA Loans or commercial financing. In particular, invoice funding is designed to benefit the not-yet bankable or financially distressed business owner. As such, any type of business can receive funding solutions that SBA loans cannot.

Learn more in our previous article, “What is invoice factoring?“

How does small business invoice factoring work?

Small business funding is a relatively simple process. In addition, we can provide same day funding with a completed application and required paperwork. Conversely, traditional debt financing usually takes months for funding. However, 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:

1. Unpaid invoices to a creditworthy commercial business or government entity
2. No liens against your A/R or business assets – unencumbered invoices
3. No significant legal or tax issues
4. 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:

1. Small business or startup sells a batch of open invoices to Bankers Factoring
2. Bankers Factoring approves the small business factoring application
3. Bankers Factoring deposits up to 93% of the total invoice balance the same day as approval
4. 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.”

Improve Small Business Cash Flow with Invoice Funding

Cash flow struggles from offering credit terms to your customers can ruin your business finances. Accordingly, if your business buys and sells goods, it needs to buy merchandise before it can be sold. Additionally, long operating cycles, with lengthy days sales outstanding (DSO) will cause your payables to outpace A/R.

By selling your invoices, you are securing a reliable source of funding for your small company. Here are some of the ways invoice funding helps improve cash flow:

• Eliminate the wait of NET 30 or NET60 billing terms
• Sell your invoices and have the free cash flow to cover payroll each week
• Working capital to buy more inventory
• Acquire more customers with credit terms and avoid the stress of financing
• Payroll financing source for weekly or bi-weekly periods 

Accordingly, selling unpaid invoices is a funding option to accelerate cash and financial operations for your startup or small business.

How does small business invoice funding work?

Small business owners and entrepreneurs rely on personal credit and savings to bootstrap operations. Consequently, cash flow struggles are constant when building your business; eventually, you need funding sources. As such, selling unpaid invoices provides entrepreneurs a low-risk cash-flow financing solution.

The process of small business financing through Bankers Factoring is client-focused, enabling you to complete our application online. Furthermore, underwriting standards in traditional financing do not allow much room for startups or small businesses. Additionally, you can leverage creditworthy customers to obtain funding by selling your invoices.

We inject a working line of credit into your business within 3 to 5 days of your funding application. In addition, we cash advance (advance rates) 80 to 93% of your total accounts receivable (A/R) value upon funding approval. Furthermore, invoice funding is a fast process geared toward small companies.

What are the advantages of small business factoring?

Small business factoring provides a quick financing process for companies in a cash flow crunch. In addition, fast funding depends on your customer’s (account debtor) credit and benefits the not-yet bankable small business. Invoice funding also 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 start at .95%: small business funding rates start at .95% per 30 days. Invoice factoring makes sense for startups compared to costly Merchant Cash Advances (MCAs) or high-interest debt.
• Funding solution with unlimited access to working capital: small business factoring is a 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. Also, Company ABC extends NET 30 payment terms.

The small business completes the invoice funding application with Bankers Factoring to quickly turn outstanding invoices into now cash flow. Don’t wait 30 to 90 days for customers to pay.

Bankers Factoring conducts the invoice factoring due diligence process. The small business factoring agreement includes the following terms:

Factoring Line	$50,000
Initial Cash Advance (90%)	$45,000
Factoring Fee (per 30 days)	1.50%
Rebate	$4,250

Company ABC can expect two cash disbursements assuming the account debtor pays on time. First is the initial cash advance of $45,000, which is a 90% advance of the total AR value. The second and final funding 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 transaction.

How to qualify for small business funding?

Funding your startup company with unpaid invoices is a fast way to secure working capital. As such, the requirements for factoring are different from traditional bank lending. Accordingly, you can finance your invoices based on your customer’s credit. Comparatively, having strict debt-to-income and credit score standards, Bankers Factoring funds small businesses based on your accounts receivable (A/R) credit quality.

As such, small business owners with bad credit can obtain working capital funding by selling unpaid A/R. Furthermore, your company can develop its balance sheet and credit quality by free cash flow from invoice funding.

What costs does a small business incur when selling invoices?

The discount rate is the main cost when selling your unpaid invoices. Additionally, the discount rate is also called the factoring fee or rebate. Industry standards are between 1% to 5% for invoice funding services. Accordingly, your factoring rates depend on a couple of main factors:

• Your customer credit history 
• The risk associated with your business and industry 
• The concentration of your invoices or how many customer’s unpaid invoices you are selling 

In addition, your company incurs additional fees such as administration, wire, and late fees. All fee schedules are included in your service agreement. We pride our services with no hidden fees or charges.

Bankers Factoring Small Business Factoring

Bankers Factoring Small Business Factoring helps startups fight pressures with cash flow funding. Additionally, with Bankers Factoring, our Startup Non-Recourse AR Factoring service protects our clients against risks. We provide AR Insurance to cover our clients from customer bankruptcy, insolvency, and slow pay.

We provide a protected cash flow solution to small business owners with access to unlimited working capital. Accordingly, if your business has resorted to costly Merchant Cash Advances (MCAs), we are here to save you with non-recourse factoring financing options.

Small Business Factoring gives you the following:

• Access to Unlimited Working Capital
• Fast Application Process
• Up to 93% of Total A/R Balance Cash Advance
• Factoring Rates of .95-1.60%
• A/R Insurance
• Cash Flow Management
• The safest business financing
• Outsourced A/R Management with Bankers
• Same Day Funding
• Small Business Payroll Funding

Ready for the owner-employees of Bankers Factoring to fund your Small Company safely? Use our fast online factoring application or call the toll-free number 866-598-4295

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