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Invoice Factoring Loan

Invoice factoring is a type of financing that allows businesses to get cash quickly by selling their outstanding invoices to a factoring company that gives ability to cover your monthly expenses. The factoring company then takes responsibility for collecting payment from the customer.

What are the Two Main Types of Factoring?

  • Full factoring
    With full factoring, the factoring company takes over all aspects of collections, including sending invoices, following up on late payments, and taking legal action if necessary. The business owner receives an advance payment of typically 80% of the invoice amount, and the factoring company collects the remaining 20% plus any late fees.
  • Maturity factoring
    With maturity factoring, the business owner retains responsibility for collections. The factoring company simply advances a percentage of the invoice amount, typically 50% to 70%, and the business owner is responsible for paying back the advance plus interest when the invoice is paid.

Who should apply for an Invoice Factoring Loan?

Invoice factoring can be a good option for businesses that need cash quickly to cover expenses, make payroll, or invest in new equipment. It can also be helpful for businesses that have difficulty getting traditional bank loans. However, invoice factoring can be expensive, and it’s important to compare the costs of factoring to the costs of other types of financing before you decide if it’s right for your business.

What are the benefits of Invoice Factoring?

  • Quick access to cash
  • No personal guarantee required
  • Can improve your credit score
  • Can help you avoid late payments
  • Can help you manage cash flow

What are the Cons of Invoice Factoring?

  • Expensive
  • Can lose control of your receivables.
  • Can damage your relationships with customers.
  • Can be difficult to qualify for

Are you ready to apply for a Sort Term Business Loan?

If you’re considering invoice factoring, it’s important to speak with one of funding specialist to understand various programs. We can then take a look at your invoices, bank statements and profit and loss statements to help you make a good decision for the right solution. We help you understand the terms of the agreement before you sign anything.