What is factoring?
Factoring is the purchase of valid Commercial Accounts Receivable for cash.
Is factoring only used by businesses in financial trouble?
This is not true. Factoring services
are used to provide a business with opportunity to grow without giving away equity or accruing more debt.
How is factoring different from a loan?
Unlike most banks and other factors, there is no personal guarantee tied in with factoring services.
How do I know if my business qualifies for factoring?
Just about any business can qualify. If a business has an AR due to sales in a business to business transaction, you are most likely are qualified. Any size invoice can be funded as long as the service has been offered or the product delivered.
Does my business have to be at least three years old?
It may depend on the provider, but there are those who can aid new businesses.
Do I have to factor all of my invoices?
This will also depend on the service provider. Some will say no and allow you to choose which clients and which invoices to factor. Some providers will be very flexible in their policies.
What other fees may be involved?
These will depend on each service provider; but, additional fees may include application fees, start up fees, documentation fees, due diligence fees, and closing fees.
How long will it take to get funded?
Most providers will be able to get you the first funding by 3-5 business days. There is a verification process, so that may make things take a little longer.
How will I get information on my account?
Most providers will have your account set up to be monitored 24/7 online at no charge.
What types of receivables can be factored?
Most valid invoice for services performed or products delivered can be factored.
What do I have to do before factoring invoices?
A customer must be creditworthy and your services provided to them must be completed, delivered, and accepted.
Is it good to engage in accounts receivable factoring?
Many businesses engage in this. It is a proven process, debt-free, and a flexible method to effectively multiply working capital.