Selling open invoices is a faster and less complicated funding solution than traditional lending avenues. It is an excellent alternative to a bank loan when your business needs an influx of cash before your customer payments are due. Invoices factoring also provides you with capital without incurring debt for your company. If your business is considering factoring as a way to access cash, you may have some questions specific to your company’s circumstances. Here are a few common issues that companies research when considering the factoring process.
A Lender Already Has the Rights to My Company’s Accounts Receivable
Your business may already have an agreement with a financial institution or another factoring company. You may believe that you cannot sell invoices if the institution holds the rights to your accounts receivable as collateral. However, this does not necessarily disqualify your company from selling open invoices:
- The factoring company will need to hold the rights of the asset they are purchasing from you—your invoices.
- The financial institution that has the rights to your receivables will be contacted by the factoring company to arrange a subordination agreement or negotiate the release of any liens.
- If an arrangement can be made, the factoring process will proceed as usual, with the application and approval period usually taking only a few days.
- If a buyout is necessary Universal Funding will make the arrangements
My Business Has Tax Issues
You can qualify for invoice factoring even when you are experiencing issues with the IRS or other government agencies. Approval will depend on the amount of the lien in relation to your monthly volume, as well as the specifics of the agreement you have entered with the agency.
I Have a New Business With Little or No Credit History
Factoring companies are more concerned with the credit standing of your customers since they will be responsible for payments. It is possible to sell invoices without a solid credit history.
Learn More About Factoring
Universal Funding can answer your specific questions about invoice factoring. Fill out our online rate form to request a no-cost consultation today.