Invoice Factoring Questions
Q: Is Factoring a loan?
A: No, factoring is the purchase of a company’s accounts receivable by a third party at a discount. A loan creates debt on your company’s balance sheet. Factoring allows you to speed up your cash flow by utilizing an asset your company already had.
Q: How quickly can we begin receiving cash for our Accounts Receivable?
A: Very Fast! Most of our clients have cash within 24 to 48 hours after the receiving approval. This process normally takes 3 to 5 business days.
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Q: How much does Factoring cost?
A: Costs will vary depending on the overall factors in each deal. Estimated costs can be reviewed on our factoring cost page.
Q: Who collects payment from our customers?
A: Several different programs are available. Our most common transactions are set up with the factor providing collection services with the guidance of the client. Customers send invoice payments to the factors lock box. In certain situations, we can allow the client to be responsible for collections and a lock box is set up near our client’s location for streamlining purposes.
Q: Do I need to factor all our invoices?
A: No, our clients are not required to factor all invoices. Some customers factor all of their invoices to receive a rate reduction for higher volume factoring.
Q: What will my customers think?
A: Factoring has become very common. More companies realize that rapidly growing companies require more working capital than traditional banks can provide. It’s likely that your customers have already sent payment to a factor in the past.
Questions? Call us now at 1-888-897-5470 (toll free)
Q: What if we no longer need factoring?
A: With most factoring companies you can terminate the agreement with a 30 to 45 day notice. You should estimate your needs in advance to determine which term length meets your needs best to avoid any early termination penalties. We currently offer: month to month, 3 month, 6 month, and 12 month options. Never sign a deal with a factor for term length over 12 months.