What is factoring finance and how does it work?
Can I Turn Net 30-90 day Invoices into Safe and Ready Cash with Factor Finance?
Entrepreneurs work hard to make their dreams become a reality. They are investing their life savings into their business. They spend endless days on the road and sleeping in hotels. They stress over making payroll every two weeks.
Factoring financing, or invoice factoring, removes the stress and strain of poor cash flow and limited working capital. Entrepreneurs, startups, and growing businesses benefit from factoring financing to sustain business operations and acquire new customers.
By selling your open invoices to Bankers Factoring, you can receive up to 92% of the value and immediately have payroll funding. No more hassle of meeting bi-weekly payroll.
Invoice factoring helps startups take on large commercial accounts with extended payment terms of up to 90-days. Bankers Factoring non-recourse factoring solutions close cash flow gaps for businesses in many industries.
What is factoring financing?
Factoring provides businesses with financing through selling open invoices or selling their open accounts receivables. Financing your business with invoice factoring is a quick and easy way to meet payroll funding without expensive merchant cash advances (MCA’s).
How does factoring provide financing?
When our clients sell their invoices to Bankers Factoring, we provide two cash disbursements. The initial cash advance is up to 92% of the A/R value. We issue the second payment, the rebate, for the remaining balance less our small factoring fee.
To learn more, visit our previous article How Invoice Factoring Works.
What is the process for factoring in financing?
The invoice factoring process is quick and easy and provides working capital when startups and entrepreneurs need it most.
- Client invoices customer (account debtor) for delivered goods or services
- Client submits factoring application to Bankers Factoring
- Bankers Factoring approves applications based on the account debtor’s credit
- Bankers Factoring provides same-day funding after approval of up to 92% of the invoice value
- Account debtor pays Bankers Factoring
- Bankers Factoring releases the remaining invoice balance less our factoring fee
The rebate is the final step to conclude the factoring transaction. We work with our clients to develop customized cash flow management solutions to sustain cash flow.
To learn more, visit our previous article Understanding Non-recourse Factoring.
How to qualify and get approved for invoice factoring?
To qualify for accounts receivable factoring, your business must have open receivables from a business-to-business (B2B) or business-to-government (B2G) entity. Invoice factoring approval depends on the customer’s creditworthiness (account debtor).
Invoice factoring is an outstanding solution for business owners with distressed financial situations. Financially distressed business owners may have issues from recent bankruptcy, poor credit, or seasonal business demands.
Bankers Factoring works with financially distressed businesses each day to remove the obstacles of traditional lending. These are the eight main requirements to qualify for invoice factoring financing:
- A completed factoring application
- An accounts receivable aging report
- A copy of your Articles of Incorporation
- Invoices to factor with confirming delivery of service or product information
- Credit-worthy clients (we will check on their credit for you)
- A business bank account
- A tax ID number
- A form of personal identification
Is invoice factoring financing right for my business?
A/R factoring removes the burden of cash flow gaps due to slow-paying customers and extended credit terms. Small businesses are left waiting for cash when your customers have net 30, 60, and 90-day payment terms. If your business lacks sufficient reserves or working capital, we can help you.
Here are everyday situations when business owners use factoring financial services:
- Distressed finances from bankruptcy or poor credit
- Startups lacking the history for traditional lending
- Importers and wholesale trade organizations
- Business owners who have no more reserves
- To acquire new customers and sales
- To cover operating expenses
- Payroll funding
Industries that use invoice factoring
We work with clients from entrepreneurs, startups, and rapid-growth companies in many industries and sizes. Some of the main industries Bankers Factoring works with include:
- Payroll and staffing
- Oil and Gas
- Government contracting
- Wholesalers and Importers
- Wine and Spirits
- Agriculture/ PACA
How much does invoice factoring cost?
The cost of factoring is determined by your invoices’ financing amount, volume, and credit quality. In general, fees range from .75% to 3.5% per month. Bankers Factoring offers tiered pricing for startups that rewards growing businesses with more financing.
To learn more, visit our previous article Factoring Rates Explained.
Bankers Factoring adds value to our clients’ business by removing the cash flow struggles through our A/R factoring solutions. Our non-recourse factoring provides bad debt protection covering our client’s from default on the receivables. Our factoring solutions provide Total A/R Management, allowing business owners to grow their businesses.
We help businesses from no working capital to consistent cash flow and improved business operations. We manage the receivable process and take on the credit risk if the invoice is slow or short-paid.
- A/R Management
- Non-recourse factoring
- Tiered Pricing
- Same-day Funding
- A quick and easy approval process
- Low factoring costs
Take advantage of our factoring financial services today. We can even fund you on the same day.