Use Invoice Funding To Quickly and Easily Get The Cash Your Company Needs

use invoice fundingInvoice funding is a great way for companies to easily access the money needed for maintenance and even growth. It allows them to quickly generate cash that at times, may be desperately needed.

Many companies experience cash flow problems at one time or another. When this occurs, they may have trouble meeting their obligations.

It is likely that they will have almost no money to fund expansion and growth. When there is no money for marketing, it can be difficult to generate new business, which is necessary for the long-term success of their business.

Without enough money to pay their bills, a company won’t be able to grow their business and they may have trouble keeping their doors open. Invoice funding is a remedy to both dilemmas.

Immediate Cash with Invoice Factoring

This is a good option for companies looking to immediately infuse cash into their coffers. Many companies, in a variety of industries, are eligible. If they have creditworthy customers who owe them money, they may qualify for this type of commercial financing.

Factors are the businesses that make invoice financing possible. They purchase the outstanding invoices of companies looking to sell them for fast cash. The holders of these invoices, those persons who owe money for work or goods already provided to them, must have good credit. This is a bit unique because in most cases, it is the business that needs to be creditworthy if they are to receive financing. Invoice factoring turns the traditional requirements on their heads.

It doesn’t typically matter how long a company has been in business or even how good their credit score is. If they have outstanding invoices owned by persons (or companies) with good credit, they can sell those for cash, to a Factor.

What You Need to Know on Factoring

Factors purchase invoices for less than what they are worth. They generally offer a rate that is about 10% to 30% cheaper than the full value of the invoice. For example, an outstanding invoice worth $100,000 might be purchased for between $70,000 and $90,000.

The exact amount might be dependent on a number of things, including when the invoice is due. One that is due in 30 days might command a higher price than one due in 90 days. The creditworthiness of the clients and the going rate of the industry will also impact the final offer.

After the invoices are purchased, the Factor then collects on them. All of the previously agreed upon terms of payment remain the same and all monies are now sent to the Factor. Once they receive them, they are returned to the company that originally owed them. The only money which is kept is the pre-arranged fees for the Factor’s services and the money already paid for the invoices.

As one can see, invoice funding can be an excellent way for businesses to quickly generate capital. It allows them to raise money regardless of their experience and creditworthiness. If they have companies with good credit history, who owe them money, they are able to use them to secure a cash advance.

Instead of waiting 30-90 days, the typical amount of time it takes for a company to receive payments for invoices. They are able to access a good portion of the amount owed to them in a matter of days.

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