What is Invoice Factoring?
Invoice factoring is a financing solution that allows businesses to convert unpaid invoices into immediate cash by selling them at a discount to a third-party company, known as a factoring company. This service helps businesses maintain steady cash flow and avoid the disruptions caused by waiting for customer payments.
Benefits of Invoice Factoring
Invoice factoring offers several advantages that can help businesses, especially those with a high volume of unpaid invoices, stabilize their finances and expand their operations:
- Immediate cash flow without taking on debt.
- Streamlined accounts receivable management, freeing up time and resources.
- Flexible financing option based on your sales, not your credit score.
- Opportunity to grow faster by leveraging cash from outstanding invoices.
How Invoice Factoring Works
The process of invoice factoring is straightforward and designed to help businesses quickly unlock the value of their unpaid invoices. Here’s a step-by-step breakdown:
- Submit Invoices – Your business sells outstanding invoices to a factoring company.
- Receive Cash Advance – The factoring company advances a percentage of the invoice’s value, typically between 70-90%.
- Customer Payment – Your customer pays the invoice amount to the factoring company.
- Remaining Balance Paid – Once the customer pays, the factoring company releases the remaining balance to you, minus their factoring fee.
This process can be repeated as needed, offering a steady source of cash flow for growing businesses.
Frequently Asked Questions (FAQ)
What types of businesses benefit most from invoice factoring?
Businesses with a high volume of outstanding invoices, such as those in manufacturing, distribution, and services, often benefit most from invoice factoring.
How quickly can I get funds through invoice factoring?
Once approved, funds can be advanced within 24-48 hours, providing quick access to working capital.
Is invoice factoring considered a loan?
No, invoice factoring is not a loan. It’s an asset sale that provides immediate cash without adding debt to your balance sheet.
What’s the cost of invoice factoring?
Factoring fees vary but are generally based on the total invoice amount and the time required for your customers to pay.
Why Choose Factor & Fund for Invoice Factoring?
At Factor & Fund, we specialize in helping businesses bridge cash flow gaps with reliable, transparent, and flexible invoice factoring solutions. Our team works closely with each client to provide the financing needed to meet operational demands, seize growth opportunities, and thrive in a competitive market.
Ready to learn more?
Contact us today to find out how invoice factoring with Factor & Fund can support your business.