How Does the Invoice Factoring Process Work?
Although invoice factoring might interest your company, one of the best ways to know if it’s right for you is to better understand the invoice factoring process. The best factoring companies try to make the process easy on your business. Universal Funding, a top-rated factoring company, helps you to clearly understand the different roles involved with getting your business the cash it needs through the sale of your accounts receivable. Here’s a graphic that outlines the simple process of invoice factoring.
Your Role in Invoice Factoring
You need to maintain a good relationship with your customers, even when you factor their invoices. You provide your service to your clients and create an invoice. A copy may be sent to your clients so they know how much to pay. If you choose to use invoice factoring, you then send the invoice to us as well. Typically, the more invoices you factor, the lower the rates will be.
The Role of the Factoring Company
The factoring company pays you a certain percentage for the invoices as per our agreement. We notify your customers where they need to send their payment, which is made payable to your company. We then wait for your customers to pay the invoice amount within the agreed upon terms. If the amount is left unpaid, we work with your business for further options. Once the customers pay in full, we pay you the remaining balance, less any fees.
Related: 10 Considerations When Selecting the Best Factoring Company for Your Business
Your Customer’s Role
Your customers continue to receive the same great service from you they have come to expect. The only change they experience during the invoice factoring process, is where they send their payment. Instead of sending payment to you, they will send it directly to the factoring company.
Related: How Will Invoice Factoring Affect Your Customers?
Universal Funding Makes Invoice Factoring Simple
Invoice factoring does not have to be a complicated process. It’s not like applying for and paying back a loan. You do not need to calculate interest or arrange for installed repayments. Here is how the process works:
- You provide goods or services to your clients and send them an invoice.
- You send a copy of the invoice to your factoring company.
- The factoring company pays you a specified percentage for the invoice, usually 80-90%.
- Your customers submit payment, made payable to you and sent to the factoring company for processing.
- You receive the remaining balance for the invoice(s), less any fees.
Get You the Cash You Need With Invoice Factoring
You don’t have to stress about how you’re going to pay your company bills, if you’ll have late fees, or how long it will take to apply for another loan. Universal Funding can get you the working capital you need with quick and easy invoice factoring.