Businesses with slow paying customer often sell their invoices to a factor to avoid a cash-flow crisis. The factor buys the invoices, advancing 85%-90% of the invoice amount, after checking the credit-worthiness of the billed customer. When the invoice is paid, the factor remits the balance, minus a nominal factoring fee.
Business that utilize factoring have the benefit of getting paid quickly rather than waiting the 30 to 90 days that some customers take to pay their bills. After sending an invoice to a factoring company, a business will have money in its hands within 24 hours.
Many companies use factoring to help them get started. Factors look at the financial soundness of their clients’ customers. Since banks focus on personal credit scores and a successful financial history in considering whether to make a loan factoring becomes a popular alternative form of financing. As a result, businesses with little credit history can qualify for invoice factoring.
Billions of dollars in accounts receivable flow through factoring companies each year. Some businesses use factoring as a steppingstone while others prefer factoring to banks, which require more paperwork, or outside investors who take valuable equity.
American Receivable is a top-rated factoring company that offers their clients fast turnaround times at competitive prices. We are still owned and managed by the original founders who understand what it takes to make companies successful. Call us today to learn how American Receivable can help you succeed.
Call us today at 800-297-6652 or schedule an appointment to learn how accounts receivable factoring improves small business cash flow. In the DFW area, call 972-404-4726. To find out how invoice factoring can help get your small business off the ground, call Jack Stieber or Brad Gurney or complete our quick application form.