Factoring Your Invoices
Setting up your Factoring is not as hard as you think and it's way cheaper than fast cash. Set yourself up for stability by factoring your future!
Invoice factoring is a type of financing that allows businesses to sell their outstanding invoices or accounts receivable to a third-party financial company, known as a factoring company, at a discounted rate.
The factoring company provides an immediate cash advance to the business, typically ranging from 70% to 90% of the value of the invoices, and then collects payment from the customers directly. Once the customers have paid their invoices, the factoring company deducts their fees and the remaining balance is returned to the business.
This type of financing can be beneficial for businesses that need immediate cash flow to cover expenses, pay suppliers, or invest in growth opportunities. It can also help businesses avoid the risks associated with non-payment or late payment by customers.
However, it's important to note that invoice factoring can be relatively expensive compared to other forms of financing, as factoring companies charge fees for their services, and the discounted rate for the invoices can be significantly lower than their face value. Businesses should carefully consider the costs and benefits of invoice factoring before deciding to use this financing option.
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To qualify for invoice factoring, a business typically needs to meet the following requirements:
B2B or B2G sales: The business must have a history of selling goods or services to other businesses or government entities, and issue invoices with payment terms.
Creditworthy customers: The business's customers must have a good credit history and a low risk of defaulting on their payments.
Invoices with a short payment term: The factoring company typically prefers to purchase invoices with payment terms of 90 days or less.
Minimum monthly sales volume: The business should have a minimum monthly sales volume of $50,000 or more to be considered for invoice factoring.
No major legal or tax issues: The business should have a clean legal and tax history, with no major outstanding liens, judgments, or tax issues.
A business entity: The business must be a legal entity, such as a corporation, LLC, or partnership.
A clear accounts receivable ledger: The business must have clear, accurate, and up-to-date accounts receivable records.
Additionally, some of our Factoring Company Partners may have specific industry or geographic requirements, and may require a personal guarantee or collateral from the business owner.
It's important to note that the requirements for invoice factoring can vary depending on the factoring company and the specific terms of the financing agreement. Businesses should carefully review the terms and fees of any invoice factoring agreement before agreeing to sell their invoices.
Automatic, pre-approved Line of Credit. Have extra money for covering bills, repairs, or whatever comes along.
You’re automatically approved when you open your account
Credit is available whenever you use freight factoring with eCapital (up to $2,500 per truck)
Tap into funds for unexpected expenses and new opportunities