What is Factoring?
Factoring is a financing process that gets you money for your receivables immediately, instead of you waiting 30–60 days for your customers to pay. The process has a variety of names: Invoice Factoring, AR Factoring, Asset-Based Lending, and Commercial Finance Lending. Regardless of the name, the result is the same: you receive money for your receivables as soon as your sale or service is complete.
It solves a cash flow problem by enabling you to meet payroll obligations or pay other business expenses in a timely manner. To summarize the way factoring works:
- We advance 70–85% of your invoice on the day the service or sale is complete and you invoice your customer.
- We will mail your invoice to the customer on your behalf and collect the accounts.
- The balance (15–30%) minus our fee (2.0 –5.5%) is paid to you the day we receive payment from your customer.