By Jeff Jacobs
As banks become more restrictive with their lending, more and more business owners are turning to alternative lenders to find the additional working capital they need. Invoice factoring, also sometimes referred to as invoice finance, is when a business owner sells their accounts receivable to a factor for immediate cash. Business owners improve their cash flow with factoring without incurring any debt or giving up any equity. Factoring is much simpler to apply for compared to bank lending.
Factors look for the following requirements to qualify new clients.
1.The first requirement is having open invoices to either another business or governmental entity for delivered goods or services.
2.Factors make their underwriting decisions based on the strength of your customer. The factoring company will be most anxious to buy your invoices when your customers have a good credit report. Factoring companies do not focus on their client’s financial record, so business owners with a few bumps and bruises on their personal credit report will often still qualify for invoice factoring.
Many factoring companies have industries that they prefer to factor. It pays to check out a factoring companies on-line reviews and if they are rated by an independent reporting site. Having the right factor will provide the reliable cash flow that entrepreneurs need to grow their enterprises.