What is business factoring?
Business factoring, which is also called invoice factoring, allows you to receive money from your business unpaid invoices through a factoring company or a factor. Factors take your accounts receivable, review them, and upon approval, advance you a certain percentage of the overall value of your submitted invoices.
Essentially, invoice factoring services provide a fast-funding option for large and small businesses who meet certain criteria. Unlike business loans and lines of credit, your personal and business credit history do not come into play. Qualifying for business factoring relies on your monthly invoices and the credit worthiness of those to whom you extend a limited line of credit through invoicing.
The process of business factoring
On your end, factoring will be a simple and straightforward process. You will begin by compiling and making copies of the outstanding invoices that you want funded. Be sure to double check that all required information and signatures are in place before handingyour invoices over to the business factoring service to avoid future delays.
Once the factor has possession of your invoices, they will perform certain checks on your clients to verify their payment history and their credit worthiness. This information is used by A R factoring companies to determine whether they can accept your invoices, how much money you are eligible to receive up front, and the discount rate that they will charge you for their services.
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