Factoring is defined as the purchase of a company's receivables as opposed to a loan using the receivables as collateral. Banks often have restrictive lending requirements relating to cash flow, profitability, equity, and years in business which prohibit them from making loans. Factoring companies are not in the lending business. The decision to purchase invoices is influenced by the quality of your customer base and their performance as opposed to years in business or financial strength. The factor bills the invoice to your customer and then follows up on it to ensure receipt of payment.
Fees vary from company to company and from client to client.
They are determined by a combination of your customer base creditworthiness, average payment cycle, invoice size and factoring volume. You decide which invoices you need to sell to manage your cash flow needs. However, there are monthly minimum requirements, which vary from factor to factor. Click here to fill out a Client Profile and start getting your cash immediately. All rights reserved.