What is factoring & how can it help my business?

What is factoring & how can it help my business?

Factoring is a business financing transaction in which your business sells its creditworthy invoices at a discount for cash. Factoring invoices is NOT borrowing, so there are no monthly payments to make and no additional debt on your company’s balance sheet. After establishing an account with BUSINESS FINANCE CORPORATION, you present only the invoices you want to factor, and your business will be approved for a monthly invoice factoring amount. You can factor invoices up to that amount. Typically, we will advance 70%-80% of an invoice, with the balance held in reserve until the invoice is paid. Funding can usually be provided within 24 hours. The typical factoring transaction costs 2%-5% of the invoice amount sold, essentially comparable to the costs of a merchant credit card account. There may also be a small setup and monthly maintenance fee, depending upon the needs of the individual client. In most instances, a company is not required to factor a minimum amount of invoices each month. You sell us only the invoices you want to factor, when you need the money. In other words, it is up to you when and how much you want to factor.

Factoring isn’t a loan, so the fact that your company’s balance sheet doesn’t have the right “ratios” or that banks have turned you down for a line of credit or loan, doesn’t matter. If you have creditworthy clients, and good receivables, you are a candidate for factoring. In many industries, factoring is a routine and commonly used method of asset based financing. It does not reflect badly on a business at all, and in fact it demonstrates to your clients that you actively and aggressively manage your business and its cash flow needs.