How Factoring Works

factoring

The Process of Factoring

THE FACTORING PROCESS EXPLAINED

STEP 1 – INVOICES INTO CASH

You have Open B2B or B2G Invoices and need cash now.

STEP 2 – VERIFICATION

The factor verifies your customers are creditworthy and love your product and services.

STEP 3 – SAME DAY CASH

The same day we wire you 80-90% of all your open Invoices.

STEP 4 – BALANCE RECEIVED

In 30-60 days, your customer pays the lockbox, and you get the balance less the factor’s minimal fees.

STEP 5 – REPEAT

Repeat when you have new invoices for continued, unlimited working capital!

HOW FACTORING WORKS

Money Fuels Business

When cash flow stalls, it compromises your ability to run your company. How many times have you put aside bills, lost sleep over payroll, or couldn’t pay suppliers when they asked for payment? There is a time during each month, for all growing businesses, when outstanding receivables are keeping you grounded. If only you could get paid today for the work you completed, your company would take off. This is why you need the Paragon Factor.

A Factor Serves as Your Cash Flow Engine

The process is called factoring. In the simplest terms, it means the factoring company advances you up to 90% of the invoice amount immediately and gives the remaining balance when your clients settle in full. You may submit the invoices directly upon completion of work or product delivery. Revenue flows directly and instantly to you. No delays. No collection hassles.

Factors can often assume all credit risk and responsibility for client payment. In return, the actor receives a small fee at the end of the process. Set-up time can be as little as 2 or 3 business days. Factors allow you the flexibility to factor only when you need it, and as often as you like. The factoring company will base its approval decisions on your customers’ ability to pay, and not the credit of your growing business.  Ask about invoice factoring and purchase order financing along with our included credit protection.

Factoring Improves Cash Flow Without Additional Debt

Factoring is not a loan, so you’re not incurring any debt. Factors purchase the invoices from you. Once the factor advances your first 80-90%, the factoring company owns the rights to the invoice and collects directly from your customer. A simple notification is used in the initial stage of the process to inform your clients of a change of remittance.

Factors ask for no equity stake in your company. You maintain full command of your business.

Customer Credit Services

At no extra cost, factors now act as your in-house credit department. If you’re thinking about doing business with a new client, give the factoring company a call. The factor will provide you with detailed information on their payment and credit history. Factors can help you steer clear of doing business with bad companies.

Accounts Receivable Management

Factors provide online, real-time reporting. You can log on anytime and see updated aging reports, collection reports, and more. Backdate specific reports and print them out directly for internal use or accounting purposes.

A factoring company is not a collection agency, but we do have a team of callers that put in friendly reminders on accounts when they become past due. We make sure to handle all calls in a professional manner.

Invoice Factoring Provides Flexibility

Our agreements allow you the flexibility to factor what you want when you want. You can pick and choose the accounts that you want to factor. Some companies will require you to factor everything, but some won’t. There are factoring companies that only want you to use invoice factoring if and when it’s beneficial for you.

Win More Business-Get Supplier Discounts

Ultimately, this is the goal of invoice factoring. With your newfound cash flow, you can now go after more massive contracts and more significant clients. The big guys often take longer to pay. It’s challenging to perform big jobs or fill larger orders when you don’t have the cash flow to sustain it. The ability to grow your business is the Paragon Factor.

Also, you can now ask for trade discounts from your suppliers. Often getting a 2% discount for quick pay to your suppliers can help absorb some, if not all, of your factoring costs.

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Factoring solves your working capital issues!

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