Invoice factoring refers to the process whereby a company sells their open invoices to a third party factoring company in exchange for a large advance of cash. The manner in which invoice factoring is achieved is very simple and easy.
Here’s How Invoice Factoring Works:
The company that is in need of cash simply contacts a factoring business and submits their open invoices to the company for payment. Typically the application and approval process can be completed in a matter of days. In exchange for paying for the invoices, the factoring business retains a small portion of the face value, this is the factoring fee or rate. This means that every invoice, no matter how long the credit terms are, can be paid immediately rather than forcing your company to wait 30, 60, or even 90 days and more for payment, keeping your cash flow intact and preventing your business from experiencing a significant cash flow shortage.
With invoice factoring, many of the usual cash flow problems and lack of solvency that businesses that extend credit terms to their customers experience are eliminated, making it an ideal arrangement for many companies who seek to recapitalize their businesses without going into debt.
In addition, companies can utilize an invoice factoring service to help them collect past due invoices, eliminating the need to hire employees to dedicate themselves to the unpleasant task of collections activities.
If you are ready for one of the best factoring companies, to turn your invoices into fast cash, give Universal Funding a call today at 1-800-405-6035 or submit a rate form for a free consult on your financing options.