Researching business loans produces many options for your company. During research for a funding solution, you most likely will learn about accounts receivable financing, also referred to as factoring. This type of financing allows you to sell your open invoices to a factoring company before customer payments are due. Your business receives a quick influx of cash without incurring debt. Here is some specific information about accounts receivable factoring rates and the factoring process.
How a Finance Company Determines Your Factoring Rates
Finance companies work with all types of companies, including those with little or no credit history and businesses who are experiencing tax issues. Top factoring companies will have the expertise to negotiate with other financial institutions and/or the IRS, which can be helpful if a lender already has the rights to your accounts receivable as collateral.
Even if you have been told you do not qualify for a business loan, you may still be able to access cash through factoring. Finance companies determine your factoring rates based on several variables, including:
- Your company’s sales volume
- The current climate of your industry
- Trends in your customer payment cycles
- Your customers’ credit strength
What Happens When You Sell Your Invoices
One major advantage of factoring is the quick turnaround rates for accessing cash. Application and approval can be completed within a couple business days. Your business can access cash within hours of approval. Once your business has entered into a financing agreement, you and the factoring company will work together to complete the notification process:
- You will introduce the finance company to the customer associated with your factored invoice.
- The finance company will contact the customer to redirect their payments.
- Your customer will send their payments to the finance company.
Most of the notification process is managed online and is fast and seamless. Once you have transferred your invoices to Universal FundingRu, your part of the process is completed. Selling your invoices is fast and simple, and it does not put your company in further debt.
Learn More About Accounts Receivable Financing
Universal Funding can answer any specific questions about invoice factoring you may have. Contact us by filling out our online rate form to request a no-cost consultation today.