Instead of waiting weeks or months for a customer to pay, you can factor the invoice with a small business factoring company for a small fee (called a factoring fee). Invoice factoring is a cash flow management tool that unlocks the money tied down in as-yet unpaid customer invoices. Your company receives any amount held in reserve after the invoice is paidįactoring Speeds Up Small Business Cash Flow The factoring company earns 5% factoring fee Your company receives 90% advance of $10,800 by wire transfer or ACH Generate $12,000 client invoice and factor it Invoices factored are typically funded on the same day – up to 90% of the face value of the invoice, with the remainder placed in “reserve” pending customer payment.įor instance, let’s say that you are billing a customer in the amount of $12,000 but you want to access the funds without waiting weeks – or even months – for your customer to pay.Īssuming a factoring fee of 5%, and an advance rate of 90%, here’s how it would work: Day 1 –
How the Small Business Invoice Factoring Process Works Once you’ve been approved and have factored at least one invoice, receive your first funding in days (or even hours) and get same day funding up to 90% of the invoice amount when you factor invoices after that. Request a free, no obligation quote (or apply online) to determine how much working capital you could unlock by factoring invoices, instead of waiting for customers to pay. Small Business Factoring – How the Process Works
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