People who are looking to factor their invoices will probably have the same question: Is Cheap Invoice Factoring Available? Apart from the quick turnaround approval times and outright funding, what about the other side of the story? What about the fees that come along hand in hand with this convenience?
What is Invoice Factoring?
Before getting into the details, let’s first get into a brief overview of what Invoice Factoring is and how it works. Invoice Factoring is a financing option where you don’t have to worry about incurring more debt. The process, and the funds you will get, are all in your control. You get to decide which invoices you will sell to the Factor, the company who buys your invoices at a discount.
Based on specific qualifications, the Factor will be evaluate the invoices you sell . They will perform the whole process for you, you only have to wait for the results. One main factor they will look at is how credit worthy the clients who owe you are. Credit-worthiness will be based on your clients’ capability to pay, and their level of satisfaction on the services or products that you provide. Your current credit standing or your existing bad debts will not matter for as long as the Factor proves that your clients are capable of paying their invoices they owe.
Is Cheap Invoice Factoring Available?
Is it? YES! The factoring industry is currently flourishing, continually helping small businesses expand their operations and ease cash flow issues. With all the competition among discount factoring companies, rates have gone rock bottom. In fact, for us at BusinessCash.com, we can offer 1.25 to 2.50% 30-Day rates. And this includes credit protection, unlimited working capital, and AR management.YES, now that IS cheap.
We want to keep our business alive but we want TO HELP YOU MORE. Our main goal is to give your small business a viable option to maintain working capital, land those large contracts and keep your payroll current. We want to make sure that we offer you the lowest rates possible so that you can maximize the benefits of Invoice Factoring.
Computing AR Funding and Factoring Rates
For a better idea of how the process works, here is an example. Let’s say you decide to factor your invoices to a Factor, like us at BusinessCash.com. These invoices amount to $100,000 and all of which have 30-days payment terms. The Factor will make sure that the clients who owe you are creditworthy.
Once approved, BusinessCash.com can give you cash of up to 90% of the total amount, meaning $90,000. You are free to use this amount for whatever necessities you may have. This can either be for payroll, new contracts or business expansion. They will also notify your clients, in an entirely pleasant and professional manner, that they will be receiving the payments instead. Once the alloted payment term is up, you don’t even have to think about anything anymore. The Factor will be the one to send the reminder to all your clients and collect the remaining 10% or $10,000.
As soon as payments are received, the Factor will compute the balance that will be returned to you, less the factoring fees. Let’s say that your fee is at 1.6% per 30 days. From the remaining 10% or $10,000, 1.6% of $100,000 or $1,600 will be deducted. You will then have an additional $8,400 which you can add back to your working capital or use for other purposes.
But is it Safe?
We mentioned early on that our rates include credit protection, cash flow and AR management. At BusinessCash.com, we have an advantage that protects the factor and the company selling their invoices. We offer what we call Non Recourse Invoice Factoring which technically is a credit protection solution
In Non Recourse Factoring, credit insurance is already included in the factoring fees you pay for. When your invoices have credit protection in place, you as a company do not bear any credit risk in the case of unpaid invoices. The factor bears any loss in the instance that your customer will declare bankruptcy or insolvency. You, on one hand, will be be liable for timely and satisfactory delivery of products and services. You need to ensure that your will meet your client’s expectations, quality and quantity wise.
Why BusinessCash.com Can Offer Non Recourse Factoring
In order for a Financing Company to qualify for credit insurance, they have to have a very strong balance sheet and credit culture. Large insurers have very strict guidelines which is why according to statistics, less than 20% of Accounts Receivable Financing Companies include credit insurance with their product. BusinessCash.com fortunately passes the criteria which is why we feel it is best to offer credit protection. The only thing worse than having no sales is not getting paid. Since we have a goal of forging lasting partnerships with different companies, we make sure that in helping clients, our own interests are protected as well.
Give us a Call Today!
There has never been a better time to explore factoring as your small business financing option. We work with your company closely to customize a financing program that meets your unique needs. BusinessCash.com has the experience and knowledge to deal with your specific industry needs and ultimately help your business grow.
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