![]() However, you will want to reduce the risk of payments being sent to the wrong place. The only difference is that they will pay the factoring company instead of sending payment to you. When you employ the services of a factoring company, the administrative change for customers is minimal. Once you’ve decided to factor you invoices, you can simply let your customers know that it is an important step for you business to keep up with growth while continuing to provide them with the same great service they have come to expect. Your customers can even benefit when you factor because they can choose to take advantage of payment terms that might not otherwise be offered to them. Many of your larger customers are already aware of factoring, as they are likely using it for their cash flow needs as well. The team at Universal Funding is highly professional and protective of your relationship with your customers. RELATED: 10 Considerations When Selecting the Best Factoring Company for Your Business A Fast Financial Solution Don’t let cash flow problems bog you down when you have a simple and fast financial tool at your disposal. Instead of sending statements and reminders to customers who fall behind on their payments, you can spend your time growing your business and planning for the future. You will not have to fill out unnecessary, complicated forms or have to wait an extraordinary amount of time before you get your answer. ![]() When you research invoice factoring companies, like Universal Funding, you will soon discover the many benefits of factoring receivables including how fast we provide you with cash on a high percentage of the balance due on your A/R. It could also be a more time intensive process effecting your company’s credit as well as your personal credit. While you could go to a bank for financing, when you do, you incur debt. Factoring companies purchase the accounts receivable (A/R) and provide business owners with necessary cash to pay for expenses such as payroll, inventory, office supplies, marketing, advertising and even taxes. Some have realized the effectiveness of working with invoice factoring companies. Smart business owners are always looking for ways to improve their cash flow. Is Invoice Factoring Right for Your Business? Most importantly, invoice factoring frees up the cash tied up in accounts receivables, so it makes cash flow more predictable. On the other hand, factoring is best for reducing the working capital cycle. Bank loans are usually best for one-off purposes, such as acquiring new equipment or funding fixed assets. Invoice factoring and term loans are more suited to some purposes than others. And you will repay that loan, plus the interest, in regular, equal installments. Once approved, the bank will advance you with a fixed amount of money. You also do not incur debt with factoring, so it does not show up on your balance sheet.Ī term loan is the typical business short-term loan that you would get from a bank. This means you get your money immediately rather than having to wait for 30, 60, or 90 days for the customer to pay. A factoring company buys your sales invoices from you, less a small finance fee. Invoice factoring is the financing of your accounts receivable (AR). We make sure your questions are answered and your needs are met quickly so you keep your focus on growing your business. The Universal Funding team takes great pride in helping businesses just like yours. ![]() Before approving you for accounts receivable financing, the factoring company will run a credit check and possibly contact references for your customers to ensure creditworthiness. The factoring company then assumes collection from your customers. If you choose to factor invoices, you need to find a factoring company and sell the face value of your customer invoices. When a factoring company reviews an application to determine the factoring rate, it takes into consideration variables such as: a company’s sales volume, the credit strength of its clients, payment cycle trends in your industry, invoice amounts, and overall climate of your industry. They will typically advance from 80 – 95% of your accounts receivable.įactoring rates can vary from below one percent to over five percent of the face value of the receivable. The factoring company buying the invoice will deduct its fee from your proceeds–Universal Funding’s fee can be as low as 0.55%. Once approved, you typically receive the funds within a few business days. With invoice factoring, also called accounts receivable financing, business owners are able to sell unpaid invoices for immediate access to working capital. Invoice factoring is a quick financing option for businesses who may be waiting for their customers to pay their invoices for 30, 60 or 90 days.
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