Factoring Invoices 101

Learn Why More Companies are Factoring Invoices

Many business owners are hearing about how other companies are factoring invoices, the process of selling unpaid receivables to a third party company in exchange for immediate payment. There are numerous benefits that may not be immediately recognizable to someone who has yet to partner with a receivables factoring company. Here are the top 3 reasons why more and more companies are choosing to factor their invoices.

1. It’s not a Bank Loan

When company owners seek out capital, regardless of the reason, the first and often only place they consider contacting is their local bank. Bank loans serve their purpose, but the process can be long, arduous, and often unsuccessful.  Many banks are still very hesitant to approve business loans—even if you have been in business for decades, have a great credit rating, and have all of your documents in order. Loans can take up to 25 hours per application and you may wait more than a month to get the funding you need. In addition, should you be approved, most banks have stipulations on what you can do with the proceeds of your loan.

2. Use the Proceeds How You See Fit

Factoring your invoices removes all of the hassle that can often accompany applying for a bank loan, as it is not technically a loan. You are simply selling your unpaid receivables to us in exchange for a predetermined, competitive fee. The application process is extremely fast and easy to complete, and unlike a bank, most receivables factoring companies do not dictate how and where to spend your funds. Here are just a few of the many examples of how you can use your capital:

  • Expand your operations
  • Hire more staff
  • Upgrade your equipment or tools

3. Get Paid Extremely Quickly

Tired of waiting 30 days, 60,  or even 90 days for your clients to pay your invoices? Once you partner with a receivables factoring company, you can get paid in hours or days.

Payroll Finance – Factoring Invoices is Your Solution

Payroll financing is a service that can be very important to small businesses that need a funding option to make payroll while increasing their financial stability. Payroll financing service can help you meet your payroll obligations and give you immediate cash so that you can invest in your company.

Businesses today can have an increasingly difficult time managing their payroll while clients are slow to pay with their bills. If your clients fall behind on payments, or have extended terms, it doesn’t change the fact that you have vendors and employees that still need to be paid. In situations like this, you can have a hard time growing while your financial resources are tied up in A/R.  Payroll financing can help you transform your assets into cash allowing you to be more profitable, efficient, and more productive. More importantly, you won’t have the weekly or monthly stress of making sure your customers have paid to meet your payroll needs.

Our payroll finance services are fast and use your accounts receivable as an asset. Approval can happen in a matter of days, and financing can begin within a couple of hours of receiving your first invoice.  Instead of struggling with payroll this month our Business Development professionals will follow-up with you.

Don’t Wait to Get Paid – Sell Your Accounts Receivable

Having to wait 30-90 days for customers to pay their invoices is one of the biggest challenges for many businesses today. It is especially challenging for a business that is in its growth stage and acquiring new customers daily. It takes no time at all for the majority of the finances to be tied up in accounts receivables, leaving little to no money available for everyday needs such as payroll.

Getting a loan from traditional lending companies will not help a business in this kind of situation. Bankers usually require stringent audited financial statements and a lot of collateral. On top of that, most banks are retreating from the corporate loan market and are thus becoming very picky about whom they grant loans to.  When they do grant loans, the rates are too high to get ahead.

So What is A Business to Do?

Fortunately, there is a solution for a growing business needing immediate financing called invoice factoring. In this process, a business sells its accounts receivables, or invoices, to a third party institution called a factor. It enables you to sell your accounts receivables for immediate cash. The factor purchases your invoices and provides you with an advance typically in the 70-90% range. You can now pay your everyday business expenses and invest in new equipment while the factor waits to be paid for the accounts receivable.

The benefit to selling your accounts receivable is that it is a quick transaction, approval can happen in a matter of days, and once we receive and verify your invoices, an advance can be issued in a matter of hours. Plus you are using your company’s assets and are not incurring any debt.

Accounts Receivable Funding

Despite the fact that accounts receivable funding has become common among many companies, spanning a variety of industries, there are still organizations that are unaware of the benefits. Typically large businesses partake in invoice factoring, but the benefits can be realized by many small and medium sized operations as well.  Fortunately, there is always time for business owners and operators to learn more about the process and what it can do for them.

The main benefit of accounts receivable funding is the ability to receive cash for the products or services you have sold before the client pays on their invoice. In other words, it helps offer immediate cash flow as opposed to waiting for an invoice to come to turn.   The benefits are you can pay off your vendors and overhead quicker and have access to profits immediately

As a company that specializes in accounts receivable funding, Universal Funding knows what it takes to help each and every client get the most out of the process. No matter what the industry, company size, or number of invoices, we have a service that can be customized to your needs.  We do our best  to provide high advance percentages and low factoring fees, so that you get the best value for your dollar.  When you start working with Universal you will find there are no application or set-up fees, no hidden cost, and low rates.

Accounts receivable funding may not be the right financial fit for every company, but those that consider accounts receivable funding typically find that it betters their business’ cash flow shortages in no time.

To find out if A/R funding will benefit your organization, call 800.405.6035 to speak with one of our Business Development Associates or get your rate today!

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