Funding Amount
$20,000 to $100,000,000
Payment Terms
Until invoice gets paid
You Get Funds
As fast as 24 hours
What Is Invoice Factoring?
One of the more frustrating issues that businesses can face is unpaid invoices (accounts receivable). When invoices go unpaid for an unreasonable amount of time, it can create cash flow gaps, it can stall a business from growth and investments, and it can cause businesses to be late on other payments like payroll and taxes. One way to solve this issue is with a type of finance called invoice finance or asset-based lending. This particular type of financing allows businesses to use invoice factoring, also known as “factoring” or “debt factoring”, which is a short-term business finance option or cash flow finance option that allows businesses to sell their accounts receivable ledger to a third-party (factoring) in exchange for immediate funding (capital). The factoring company will then assume the responsibility for credit control and the collection of the debt.
Why Choose Invoice Factoring As A Business?
The advantage that invoice factoring has for businesses is that you do not need to present a business plan, showcase that you are profitable, or have an incredibly high credit score to utilize it. In so long as you have a strong accounts receivable report and meet the minimum criteria set by the factoring company, you are likely to be approved.
- It can help you improve your business’ cash flow so that you can meet financial obligations such as payroll, fulfill orders, inventory management, and operational costs. This is critical as most businesses need invoices to be paid sooner than the typical 30-60-day mark.
- It can help you retain control over your cash flow and avoid cash flow gaps that would otherwise cause a crisis.
- It can help you grow your business by generating the revenue you have already earned so that you can take on new contracts, buy new equipment, and build up your inventory without waiting for clients to pay.
- It puts revenue in your pocket immediately so you are not stuck waiting weeks to collect payments.
- It helps solve late payments. Once you receive the funding, you can redirect it where you need it to go.
- It helps solve gaps in cash flow without forcing you to take on new debt or give up the control you have over your business.
- It is not a business loan, so you do not have to put up fixed assets as collateral.
- May offer credit insurance if customers you are invoicing fail to pay you - giving you protection against bad debts.
What Criteria Is Needed to Qualify?
There are a few points of criteria that you will need to meet to be successfully approved for a Invoice Factoring.
Credit Score
530 FICO
Time In Business
6 months minimum
Monthly Revenue
$20,000
When Will the Funds Be Received?
Compared to other forms of finance, there is minimal paperwork required to file for an invoice factoring option. Applicants will receive funds within 24-hours of their application being approved.
What Are The Payment Terms?
Most factoring facilities will have lock-in contracts that last 24-months and will include that the payment terms remain in place until an invoice is completely paid off.
