Does it work?
company will bill your customers in the usual way, along with
sending a copy of the invoices to the factoring company. The factoring
company will then advance your business up to 95% of the face
amount of the invoices. The factoring company then takes the responsibility
for collecting payment from your customers.
the factoring company is paid on the invoices, they will release
to your company the reserved amount of the invoice, i.e. (15%),
minus the appropriate financing fee for advancing the cash.
financing fee is based not on the strength of your company but
rather on the quality of your accounts. The cost fluctuates according
to the creditworthiness and performance of your receivables. The
fees can be as low as 1/2% of the invoice amount, depending on
the level of risk involved.
funding time for your initial factoring transaction is usually
5 to 7 days. Once your account has been set up, cash can be advanced
on your invoices and can be wire transferred to your bank account
anywhere in the country within 24 hours.
you factor, you do not incur any debt, and there are no monthly
payments. You control your cash flow by determining how much to
factor, and when.
compared to the cost of maintaining receivables for 30 days or
more, and the administrative expense associated with collections,
factoring is a wise alternative to traditional financing from
amount of Client's invoice
discount earned by Factor (2%)
Fund held for security
Advanced to client from Factor
Payment Received by Factor
Fund Refund Paid to Client less fee
proceeds Retained by Factor (fee)
(Fee is deducted from reserve)
here to fill out a Client Profile and start getting your cash