Steps to Factoring Your Accounts Receivable with a Factoring Company
Why would a company factor their accounts receivables using invoice factoring?
Table of contents
- Steps to Factoring Your Accounts Receivable with a Factoring Company
- The Benefits of an AR Factoring Company include:
- What is the factoring of your accounts receivable or AR Factoring?
- What are the two types of accounts receivable factoring or accounts receivable financing?
- Why would a company factor its accounts receivable?
- Reasons you would sell or factor invoices via accounts receivable factoring:
- Is factoring receivables a good idea?
- What is the effect of factoring business accounts receivable?
- How much does it cost to factor receivables?
- Accounts Receivable Factoring, or A/R Funding at Bankers Factoring
- Why Use Bankers as your AR Factoring Company
What is an A/R factoring company?
Accounts Receivable Factoring or A/R Factoring, invoice discounting, or A/R Funding, involves selling your open, unpaid invoices at a slight discount to one of the many factor finance companies. Bankers Factoring, a factoring company, buys your invoices and assumes credit risk and collections effort on your invoices. Over 29% of businesses fail from a lack of funding – factoring receivables or accounts receivable factoring is a financing option that provides the funding your business needs in times of growth, change, and crisis.
Please read what is A/R funding to learn more about factoring companies, the discount fee or factor fee they charge, and how the advance rate computes your true cost of factoring receivables. Award-winning Bankers Factoring is the factoring company with the lowest fees and highest advance rate. If you have a strong enough balance sheet, you can qualify for non notification factoring.
How do AR factoring services work?
We advance you 80 to 93% of your invoice value within days of sending your online funding application. Your business then receives fast funding that you receive on the same day of your account setup. Suppose you are struggling to secure financing because of bad credit or time in business. What do you do if you are turned down for a business loan? In that case, receivable factoring solves your working capital issue and allows you to safely offer credit terms to your customers.
Finance factoring is a proven cost-effective finance solution for the not-yet-bankable entrepreneur. You receive fast cash advances against your A/R with Bankers Factoring service with a high advance rate and a low fee. We also base your funding on your customers’ credit histories and not you and your company’s credit score.
You can also read our guide to funding your business with accounts receivable financing to learn more about receivables factoring services and our ability to get you immediate cash.
Understanding Accounts Receivable Factoring Services
Business owners can focus on growth, growth, and business development with the Best Receivable Factoring Company. Our non-recourse factoring program uplifts your credit profile with bad debt protection versus other recourse factoring companies. Bankers Factoring company also pays you the same day you invoice your customers, and nobody has a lower accounts receivable factoring cost. So turn your business’s unpaid invoices into safe working capital with the best invoice factoring company and our receivables factoring services.
This is one of many reasons why we are one of the best factoring companies. In addition, we have won awards in both 2022 and 2023. Let us prove to you that we are one of the best invoice factoring companies.
You can read our article on what is factoring receivables with different factoring companies and how to choose the best finance company with the best practices. Selling to government agencies? Make sure the factoring company has government factoring expertise.
The Benefits of an AR Factoring Company include:
- Accessible working capital for startups, bank turndowns, and underserved businesses.
- Fast funding for your business within three to five days with a low factoring fee.
- High cash advance rate and factoring rates are cheaper than credit cards.
- Cheaper upfront than Credit Insurance with improved profit margins.
- Eliminate long receivable cycles – creating quicker access to cash flows.
- Allows you to safely offer payment terms based on your customer’s good credit.
- Non-recourse factoring exclusive bad debt protection program.
- Both a short-term and long-term financing solution to cover overhead costs and payroll.
- Flexible financing lines that grow with your business without cutting your equity and business capital.
- Direct download into your accounting software.
- Offer credit terms with AR factoring based on customer credit ratings.
- Receivable Factoring is a great choice when you run out of bank loan options.
What is the factoring of your accounts receivable or AR Factoring?
Accounts receivable factoring is a financing option where businesses sell their accounts receivable invoices at a small discount to their face value. This allows businesses to receive immediate payment from a third party, such as Bankers Factoring, instead of waiting for customer payment. Typically, the funds from these sales are deposited directly into the business’s bank account within 24 hours or less.
As an award-winning accounts receivable factoring company, we differentiate ourselves from other factoring companies by assuming the credit risk and offering low factoring fees. Additionally, we also cater to start-up businesses.
Related article: A Comprehensive Guide to Factoring Invoices with an AR factoring receivables company.
What are the two types of accounts receivable factoring or accounts receivable financing?
There are two types of accounts receivable factoring: recourse and non-recourse factoring. Your style of factoring agreement has a significant impact on your risk exposure. In recourse factoring, your business is responsible for bad debt costs. If your customer fails to make payment, the factoring company can seek relief through your business assets.
On the other hand, without recourse or non-recourse factoring is a better solution to reduce your bad debt risk. In nonrecourse factoring, Bankers Factoring takes on the credit risk – giving you bad debt protection. You can enjoy your cash flow with no strings attached from a non-recourse accounts receivable financing company like Bankers Factoring.
Related article: Understanding Non-Recourse Factoring as a safe way to acquire non-dilutive business capital. Turn outstanding invoices into same day working capital with a factoring receivables line of credit.
Why would a company factor its accounts receivable?
The business gets paid immediately at a slight rebate. The discount cost is called a factoring fee, starting at .9% to 1.6% per 30 days. Factoring can resolve cash flow issues if your business outlays capital to produce sales. Fast funding and immediate cash make selling invoices a practical funding solution for invoices 30 to 90 days old to a factoring company.
You can also read what A/R factoring services or invoice factoring costs.
Reasons you would sell or factor invoices via accounts receivable factoring:
- Insert much-needed capital financing into your business operations.
- A trusted funding source for payroll financing lines of credit.
- Working capital to grow your business through organic and acquisition growth.
- Acquire new customers and business loans turned down.
- Real Estate is illiquid, while your accounts receivables are liquid.
- You face a lack of cash flow from stretch customers’ credit payment terms.
- You are a startup that cannot receive bank funding or bank loans do to your credit rating.
- Financially troubled business owners: bankruptcy, IRS back taxes, bad credit, no cash savings at any financial institution.
- Seasonal business cycles with sudden spikes and dips in sales.
- Your business has a long operating cycle with deep initial outlays.
Related article: Why Sell Your Accounts Receivable via accounts receivable financing.
Is factoring receivables a good idea?
If you’re a small business owner, factoring invoices can be a financial lifesaver with the right factoring company. If you have MCA or high credit card debt and too many pending invoices, factoring your receivables can help get your business back on its feet.
Many businesses are turning to receivable factoring as a basic part of their financial strategy. Only 48% of small businesses receive the funding they seek (Fundera). Factoring injects a trusted source of capital into your business, especially in times of short notice.
Receivable Factoring offers several benefits as a financing option, such as:
- An instant cash booster when you need it most (i.e., during crises).
- A new source of funding for companies who may not qualify for loans from banks.
- Your staff receives weekly payroll – payroll funding financing.
- Easy to understand factoring agreements.
- Non-recourse factoring provides bad debt protection with a low factoring rate.
- Invoice factoring gives you great customer experience with the money to cover operating expenses.
Related article: The Pros and Cons of Factoring A/R
What is the effect of factoring business accounts receivable?
Factoring positively affects the cash flow of your business and your ability to pay bills on time. Moreover, it also gives you the cash flow to prepare for economic crises and vulnerabilities. As you convert your A/R into cash, your business can operate at a higher level of sales growth. Factoring is the best type of financing for funding B2B sales growth.
Factoring can help you secure a loan or line of credit later as you step up your balance sheet. You will enjoy how accounts receivable factoring works at Bankers.
Here is our article on how to make the accounting journal entries when factoring your accounts receivable.
Factoring allows you to manage your business by:
- Managing your capital share
- Investing in assets
- Growing sales per month and meet your business goals
- Increasing staff
- Enter new markets
- New product development
- Controlling cash flow more predictably with low factor fees
How much does it cost to factor receivables?
Factoring fees are calculated as a percentage of the invoice amount for every 30 days. For instance, if you factor $100,000 invoices with a 1% factoring rate per 30 days, Bankers Factoring would receive $1,000 in factoring fees, and you would receive $99,000 in funding. It is important to note that bank interest rates do not include credit insurance or credit protection, so it is not a direct comparison.
Your factoring rate and other crucial financial conditions are in the factoring agreement. Factoring costs include discount rates and other admin processing, or transfer fees.
When factoring receivables, it is critical to understand your discount fee or factoring fee and the advance rate against the invoice value.
Accounts Receivable Factoring, or A/R Funding at Bankers Factoring
Bankers Factoring, the Best Non-recourse Factoring Company, assumes risk when buying your receivables. Our invoice funding process allows you to receive fast cash in exchange for your A/R invoices. We rely on the creditworthiness of your customers to provide you with the working capital you need.
- Get paid faster with a factoring rate that is not much more than a credit card interest rate.
- Stop tracking down payments and working on collections.
- Based on your customer’s credit history, not your credit score.
- Turn a purchase order into fundable invoices.
- Bankers Factoring company assumes the payment risk for invoice payments with free credit checks.
- No more wondering when your customers will pay when selling unpaid invoices.
- High advance rates and low factoring fees- understand your true invoice financing cost.
- Special programs for trucking companies.
- Minimal credit requirements.
- Offices from Honolulu to New York.
- Have access to free cash flow and grow your business.
- A total A/R management solution with the maximum value of the invoice.
Why Use Bankers as your AR Factoring Company
Bankers Factoring’s accounts receivable factoring services are safe and fast. We are excited to welcome you to our family of well-funded businesses. You will like how small business A R factoring works for you with us, and the cost of factoring receivables with Bankers. With our fast application process, we are ready to be YOUR CHOICE in invoice financing companies for small business owners.
We want to be your award-winning accounts receivable factoring company and give you the benefits of non-recourse accounts receivable financing and help your cash flow issues go away. You will like how accounts receivable factoring works at Bankers, accelerating your cash flow forward from your commercial or government clients’ invoices and purchase orders.
Receivables factoring with Bankers is a fast, safe, and easy qualification process. Unlike many factoring companies, we also assume the credit risk.