B2B Markeplace

Odds are if you run a small business, you will experience cash flow issues at some point during the life of your business. Many companies face shortages during the startup phase, while others don’t have the cash they need to expand their businesses. By getting professional help on forecasting and budgeting and concentrating on your efforts in collections, you can enhance your cash flow. Invoice factoring can be the answer if these alternatives are not enough.

Any cash-strapped company will find factoring a quick and easy solution by simply exchanging accounts receivables and invoices for instant money. But it includes a price. Just like a bank, a fee will be charged by the factoring company for its services.

First, the creditworthiness of your clients and your invoices will be examined by the factor. You must be ready to show the factor the following:

A financial statement – latest;
An aging report for accounts receivable;
Partnership agreement, or certificate of incorporation;

Proof of insurance, invoices and other business documents.

A factor will desire to make certain that your clients will pay their invoices on time because the duty of collecting them will become the factor’s. Once you know which invoices the factor will purchase the factor will typically pay.

The factor will often pay you an advance of as much as eighty percent of the invoice you buy and refund the rest when invoices have been paid by your customers. They can naturally take away the fee.

You’ll pay anywhere from 3 percent to 7% or more of the total the factor collects. Factors’ fees differ depending on the size of your invoices, your customers’ creditworthiness and the number of days in your collection schedule.

Accounts receivable could be a viable solution, especially if you need cash in a hurry. Once an element receives your request and examines your invoices, you can receive payment in as little as a week.

Normally, factors prefer to deal with companies that have invoices upwards of $10,000.