WHAT IS INVOICE FACTORING AND HOW DOES IT WORK?

Invoice factoring, better known as Accounts Receivable Financing, allows businesses to sell their outstanding invoices to a third party (Factor) at a discount in exchange for instant payment. Factoring is commonly used to fill cash flow problems to businesses that extend 30, 60 & 90-day credit terms to their customers. The process is relatively simple; once a sale is completed and delivered, the business receives 70-90% of the invoice amount immediately from the factor. When the customer pays the invoice business then send them the balance.

WHO IS A GOOD FIT FOR INVOICE FACTORING?

Any business that offers their clients net payment terms of 30 days or longer is a good fit for invoice factoring. Most small business owners run into cash flow problems when offering net 30, net 60, or net 90 payment terms; invoice factoring helps eliminate those cash flow problems. The following industries are known to be great fits for invoice factoring.

• Manufacturing
• Distributors
• Wholesalers
• Material Suppliers
• Trucking/Freight