Can Your Business Work With a Factoring Company?

Once you start researching viable financing options for your established business, you are likely to come across invoice factoring. This is the act of selling unpaid client invoices for immediate cash. You get paid for the invoice immediately, and your client sends payment to your invoice factoring company for the full amount according to the terms you’ve set-up with them. It’s a great option for businesses that may be in need of quick cash options. How do you know if your business can work with factor companies? You just need to ask yourself about your revenue, cash flow and accounts receivable.

possible

What’s Your Business Model Like?

Factoring receivables can only be accomplished if you have a B2B business model.  Meaning your business provides goods or services to other businesses. It is not the ideal financing method when you have a B2C where your customers are individual consumers.

What’s Your Revenue Like?

Whether or not you qualify for accounts receivable financing depends on the factor company and your revenue. If you are working with Universal Funding, we prefer that your business is earning revenues around one million dollars in sales each year as a minimum. There are many different options for businesses of all sizes. You just need to make sure you meet the minimum sales revenue requirements for the company you are requesting financing from.

Do You Need Assistance With Cash Flow?

If your business is flush with cash, you might not necessarily need factoring services at the moment. However, should you ever find yourself in need of quick cash, then factoring is a viable option. It takes less time to process than a business loan, and you don’t have to worry about paying it back.

What Are Your Accounts Receivable Like?

The next thing you need to look at is your accounts receivable. If you are looking to generate some serious cash for your business, then your accounts receivable need to be large enough to provide the influx of money for your needs. Two or three small service invoices are not likely to cut it. This is one reason why it’s recommended that you meet minimum monthly revenue requirements before seeking factor services.

We’re Here to Help

Universal Funding has years of experience providing factoring services to small- to mid-size to enterprise sized businesses generating between one and sixty million dollars annually. To learn more about what we can do for you, contact us today or fill out our rate form online.

Leave a Reply