Invoice Factoring Pricing based on your Sales Volume
Fast Growing Start-Up Companies pay less for A/R Factoring as they Grow
Are you a rapidly growing startup needing AR Financing? Don’t get locked into high flat fee factor pricing, with tiered non-recourse invoice factoring from an employee-owned factoring company like Bankers Factoring. The faster you grow, the lower your factoring fees. Expect a flexible fee structure designed around how your customers pay.
Some factoring companies charge a flat factoring fee vs a variable factoring rate over time. That is different from tiered invoice factoring pricing. Flat fees can be problematic as factors have an incentive to push your clients for early payment to make their profit go up. Variable rate simply means you pay more if your client pays in 45 days than 32 days. However, with many factors that use a 10-day or 15-day rate after the initial 30-day rate, the cost on the next bucket can vary tremendous. Bankers uses a daily rate after the first 30-days which can be a tremendous saving over time. Tiered pricing means the greater your factored sales each month, the lower your factoring fees and the greater your cost of funds savings from Bankers Factoring.
For example, you are a start-up doing less than $30,000 per month in factorable sales. Your forecast, planning, and skillset show you will be doing over $200,000 per month within 8-12 months on net 60-day terms. You will need invoice factoring because of client concentration for the foreseeable future. How can you keep your A/R factoring rates and fees down as you grow your company?
The employee-owners at Bankers Factoring understand explosive growth and the cash flow problems and customer service issues that are created. As your accounts receivable grow, working capital is depleted until invoices are paid.
With our non-recourse factoring services, pricing is tiered based on your monthly volume, for example:
- 2.25% per 30 days <$30,000 per month
- 1.95% per 30 days <$75,000 per month
- 1.75% per 30 days <$150,000 per month
- 1.40% per 30 days <$250,000 per month
The above monthly fees are for example purposes only, but you can see how your A/R factoring rates go down as your business grows. A flat factoring rate or a variable rate based on sales of less than $30,000 per month would negatively affect your bottom line.
The example factoring rates above are then pro-rated on a daily basis after 30-days. Many Invoice Factoring companies will charge you on a 10-day or 15-day rate, which means on average you are paying 5-7 days more for their money than you are at Bankers Factoring with tiered factor pricing and a daily rate thereafter. And our pricing includes us taking the credit risk.