Invoice factoring is a cash flow solution that turns invoices into quick working capital without adding any additional debt. Rather than waiting 30, 60, or even 90 days to receive payment, invoice factoring services allow your business to sell unpaid invoices at a discount to a factoring company (the factor) in exchange for a lump sum of cash known as the “advance rate”. The factoring company will then collect the invoice and provide the remaining balance owed to you, minus any factoring fees.

If your business provides goods or services to your customers that generate invoices, you are eligible for invoice factoring. You can inquire about business factoring services at any time, but especially in the following two circumstances:

• Your finances are suffering due to slow-paying customers – Unfortunately, slow-paying customers can affect many areas of your business. When you do not receive payment until months after a job is completed, it will be difficult to manage expenses, purchase supplies and inventory, pay employees and cover overhead costs. Invoice factoring can ensure you have the working capital you need to run your business smoothly.
• You are experiencing cash flow challenges – Your business can be healthy and profitable, yet still not have cash flowing in as fast as it is flowing out. When it becomes challenging to pay your day-to-day operating costs, it will also hinder you ability to grow. The cash and flexibility invoice factoring provides can help alleviate cash flow problems and allow your business to grow as your cash flow builds.

Most importantly, invoice factoring provides flexibility. Factoring offers businesses access to the cash they need when they need it most. You get to bypass the stress of slow-paying clients and late payments and receive the fast funds your business needs to stabilize cash flow. Since the amount available through factoring is only limited by the number of invoices you have to factor, it is ideal for a growing company. As your business grows, so does its credit line.

Invoice factoring is not a loan. Your business is selling its accounts receivable to the invoice factoring company at a discounted rate. Your business is simply being provided cash it has already earned, so it does not have to wait 30, 60 or even 90 days for your customers to pay – there is no new debt. In addition, your business skips the long wait times for funding and strict requirements. Invoice factoring involves significantly less paperwork, and you receive approval in just a few days.

Invoice factoring companies do not require you to factor all of your business’ invoices. You maintain the ability to choose which invoices you wish to factor based on your cash flow and business needs. The factoring company will simply review and purchase your invoices, and there is typically no long-term commitment. The beauty of invoice factoring is that it is there for your business when you need it most.