Factoring
Is waiting on accounts payable hampering your business’s ability to grow? Factoring could be the solution you’ve been looking for. Factoring lets you sell your AR to boost your cash flow. There’s no loan to pay back. A company called a “factor” gives you a percentage of what your customers owe right away. When they’re ready to pay, the factor takes the payment directly. Any excess funds get forwarded to you. You can factor invoices, purchase orders, and contracts to get cash now. You can buy the materials and supplies you need to take on bigger orders and accelerate the growth of your business. Ask us for more information about factoring today.
Invoices
How long do you wait before your customer invoices are due? In some industries, the customary wait time can be up to three months. That doesn’t mean the bills you need to pay stop coming in. Avoid late payment fees and collections costs by factoring your invoices. Factor one big invoice or several smaller accounts at a time. You can get paid for your AR in as few as 24 hours.
Purchase Orders
If you work with government contracts, you’re likely familiar with purchase orders. Federal, state, and municipal agencies often use POs to set prices and terms. After delivery, it can take weeks for your company to see payment while the wheels of bureaucracy turn. Cut your wait time by factoring your company’s purchase orders and get cash today. Deliver orders faster and bid on larger contracts when you get paid upfront.
Contracts
Businesses with long-term clients can reduce their cost of factoring by factoring contracts. Contract factoring is when you agree to sell a percentage of your AR to a factor in exchange for a lower factoring rate. This form of factoring is a great way to cut your accounting costs, since you no longer need to deal with processing payments. The factor handles collecting and settling accounts so you don’t have to. Ask us what contract factoring can do for your business today.
Factoring Highlights
Highlights
– Get cash faster when you sell your company’s AR
– Factoring helps your business move faster
– Factoring is not a loan
– Most factors charge a 3%-5% fee for their services
Benefits
– Get cash in as little as 24 hours
– Offload AR processing duties
– Low fees and interest rates
– Get 80% or more of your AR’s value now
Challenges
– Only businesses with accounts payable qualify for factoring
– May not work for smaller invoices
– Factoring relies on your customers’ credit history
– If a customer fails to pay their account, you have to repay the factor
Alternatives
If you don’t want to utilize factoring to get working capital these options may be a solution instead:
– SBA 7a Loan
– Line of Credit
– Hard Money Loan
Take the next step toward financial access.
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