Invoice finance is a financial transaction used by companies throughout the world to liquidate invoices for products or services sold to customers on credit. They finance these invoices to a third party known as a factor or invoice finance company, that purchases invoices and provides an advance against the amount to be collected. In most cases, this is done in order to generate usable cash for a business that is in need of working capital and is unable or unwilling to secure a business loan or use another form of business credit.
Invoice Finance or Invoice Discounting
It is important to note that invoice finance is not the same thing as invoice discounting or assignment of accounts receivable. Factoring, or invoice finance refers to the actual sale of an invoice while invoice discounting or assignment of accounts receivable utilize open invoices to secure business credit vehicles such as loans. These terms are often used interchangeably; however the two transactions are quite different from one another.
The best thing about factoring is the ease of qualifying and the faster funding process. Factoring can produce usable cash in a matter of days, unlike loans which can take months to receive funding.
If you are ready 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.