Step By Step Invoice Factor Financing Explanation
Will Invoice Factoring Work for My Business?
Stop cash flow struggles by selling unpaid open invoices. Turn accounts receivables into cash flow financing by invoice factoring. Why wait 30-90 days for your money?
All small businesses experience cash flow struggles. Even the well-financed startup has periods where its cash inflows are weak. Invoice factoring solves the issues of slow pay from extended payment terms.
Invoice factoring from Bankers Factoring provides businesses with immediate working capital to cover payroll and business expenses. Accelerate your working capital forward by invoice factoring and receiving cash flow today.
What is invoice factoring?
Invoice factoring or factoring invoices is an alternative source of commercial financing. Businesses can secure working capital financing by selling their invoices for open accounts receivables (AR). Invoice factoring financing helps companies bypass the 30 to 90-day wait for customer payment.
Accounts receivable factoring or factoring is another term for invoice factoring. Invoice factoring provides same-day cash flow financing for businesses struggling to meet same-day payroll financing.
Learn more in our previous article, “What is Invoice Factoring?“
Is using an invoice factoring company the right decision for your business?
Small Business owners and startups can turn unpaid customer invoices into fast cash with invoice factoring financing. If your business needs quick capital funding, invoice factoring is the right solution for the not-yet bankable.
Businesses that extend credit payment terms have issues paying employees and bills on time.
Learn more in our previous article, “Same Day AR Factoring Financing.“
What types of businesses benefit from invoice factoring?
AR Factoring is a universal business financing solution. Most industries benefit from selling unpaid invoices for immediate cash flow funding. Businesses with cash flow struggles remove their funding obstacles by receiving payment today for their sales.
Here is a complete list of company types that can benefit from an invoice factoring company.
Business-to-business (B2B) sales companies benefit from invoice factoring. Many wholesalers and distributors import products with low margins on high volumes. This business practice causes disruptions in cash flow for the importing company. Invoice factoring helps eliminate cash constraints when goods are paid for in the future.
As a small business owner, you can turn your unpaid customer invoices into fast cash with invoice factoring. This financing option is best for business owners whose customers are other businesses. Because these customers typically do not pay for goods or services immediately, invoice factoring can provide immediate cash for business owners to keep paying employees or other expenses.
How do Invoice Factoring Companies Work?
Invoice factoring companies help businesses secure capital funding to accelerate business growth. Most small businesses do not qualify for traditional bank lending. At Bankers Factoring, we provide an easy application process.
Invoice factoring financing is contingent upon unpaid open invoices that can be sold to Bankers Factoring. Without invoices, there is no invoice factoring financing. The funding process relies on the credit worthiness of the customer paying the receivables. We call our client customer, the account debtor responsible for paying unpaid invoices.
The steps for invoice factoring include:
- The client delivers goods or services to the account debtor and generates an invoice
- The client submits an online funding application to Bankers Factoring
- Bankers Factoring qualifies your application and provides same-day financing of 80-93% of the total A/R value.
- Bankers Factoring pays out the remaining open invoice balance less our small factoring once the account debtor pays.
Learn more in our previous article, “What is Factoring Financing?“
What are the advantages of invoice factoring financing?
Invoice factoring is a commercial financing facility for business owners with distressed finances needing quick working capital. Many small businesses lack the cash flow to keep up with weekly payroll and other expenses. Companies in a crunch for cash benefit from the quick same-day financing process with invoice factoring.
Invoice factoring provides a cash flow financing vehicle to cover operating and payroll expenses for the not-yet bankable business. The main advantages of invoice factoring include:
- No debt on your balance
- We take on the credit risk – providing bad debt protection
- Same-day cash funding up to 93% of total AR value
- Access to unlimited working
- Quick financing to cover payroll
- Low fees starting at .95%
- Businesses with poor credit qualify for funding
- More predictable cash flow
When should my business use invoice factoring?
If your business extends NET30 or longer credit terms, invoice factoring can help remove your cash flow obstacles. When your business provides 30 to 90-days for customer payment, you are forced to use your cash to fund operations. Not all companies have the working capital to keep up with one to three months’ worth of invoices.
Cash flow issues hurt payroll funding for most businesses. Bi-weekly payroll and salaries are one of the most significant expenses for companies. Ensuring staff retention is critical for business performance and success. Invoice factoring ensures your payroll is met on time each time.
It is common for seasonal businesses to have cash flow constraints. Due to spikes in demand during specific periods, enterprises need to strengthen cash reserves with invoice factoring. Specific industries and products see heavier demand during holidays or the winter and summer months.
Learn more in our previous article, “Seasonal Business Cash Flow Management.”
Common Invoice Factoring Terms
- Accounts receivable: money owed to a business for delivered work or services
- Account Debtor: entity responsible for paying open accounts receivable invoices and paying the factoring company directly
- Factoring Line: the amount of financing provided through your invoice factoring agreement
- Cash advance: the initial cash funding up to 93% of the total AR value
- Client: a business that sells invoices to Bankers Factoring
- Discount: also called the rebate, the final cash disbursement that closes an invoice factoring agreement
- Notice of Assignment: The Notice of Assignment is a legally binding notice sent to our client’s customers advising them to redirect payments on all client accounts to Bankers Factoring. Under the UCC laws, if a customer pays any other party, they have not relieved their legal obligation to pay the factoring company.
Visit our complete glossary of factoring terms.
What is Bankers Factoring Invoice Factoring Financing?
Bankers Factoring provides invoice Factoring to Entrepreneurs and Small Businesses struggling to manage their cash flow. Invoice Factoring provides a working capital solution for your company. Our Non-Recourse Invoice Factoring provides AR Insurance and access to unlimited working capital.
Business Owners can grow their business with Bankers Factoring. We help businesses with no working capital to develop consistent cash flow and improve business operations. We manage the receivable process and take on the credit risk if the invoice is slow or short-paid. What is invoice factoring or factoring invoices?
- Same Day Invoice Factor Financing
- AR Insurance provides bad debt protection
- Cash advances 80-93%
- Tiered Pricing for Startups
- Weekly Payroll Funding
- Unlimited Access to Working Capital
- Fees starting .9-1.5%
- Free Credit Manager
- 24/7 online A/R reporting portal