Accounts receivable financing, also known as invoice factoring, is the process of a factor purchasing invoices and providing a capital advance. When a company makes a sale, customers are often invoiced or billed for payment for remittance at a later date. To be competitive, companies may offer terms at 30 or 60 days. This practice can put a strain on the ability for a company to meet its everyday cash flow needs. It is further bottle-necked by invoices that remain unpaid past the agreed upon terms.
If a company is faced with cash flow strain or even wishes to expand or to increase inventory, rather than taking out a loan, it can choose to sell some of its invoices to an accounts receivable financing company such as Universal Funding. In exchange for those invoices, we will provide an advance payment equaling up to 90% of the value of the invoices submitted. Those funds can be used for any purpose. Once your customers make payment within the terms you agreed upon with them, the remaining balance is remitted to you, less the nominal factoring rate. This process is not a loan and does not require repayment. It does not create debt because it is considered asset based lending. It is simply a transaction that speeds up the receivables collection process.
Using accounts receivable financing is a fast and easy way for companies to capitalize on sales made and finance operations without taking on additional debt, preserving cash flow and creating an environment that allows businesses to flourish and expand.
To inquire about our financing services please call 1-800-405-6035 or fill out a rate form and one of our Business Development Associates will follow-up with you.