What is Invoice Factoring?
When a firm sells an invoice which is due to them in the future to a factor, who pays them money for that bill today. The process is similar to a cash advance; it is designed to assist new or growing businesses create predictable cash flow.
Here is how it works. Let’ assume you own a temporary staffing company which has provided $50,000 of staffing services to XYZ Manufacturing. The payment term for this $50,000 invoice is net 45 days, meaning XYZ Manufacturing has 45 days from the date the invoice is issued, to pay the full bill amount.
It is now your busiest time of year and you are growing rapidly. You are short on the cash needed to pay your growing number employees and just can’t wait 45 days (or potentially longer) to receive the money from XYZ Manufacturing. If you were to work with a factoring company, they will purchase the bill the day it is created and advance you the money you need now. The factor would advance you (for example) 80% of the invoice now. You can use those funds to pay your employees and cover off other obligations. When XYZ Manufacturing pay the bill in full, the factor remits to you the 20% balance (minus the fee earned for providing the service). In return for the initial advanced payment you assign the bill and debt owed by XYZ Manufacturing to the factor.
How To Get Started?
Fill in the form or give us a call. Find out how our specialized business funding products can fuel your cash flow without going into debt. If you decide to complete an application form (click here), Express Business Funding can provide you with funding approval within 24 hours. Once you have been approved, all you have to do is send the bills you would like to finance. It’s Fast, Easy and Affordable!