Many businesses need additional cash flow to support growth, pay taxes, meet increased seasonal demands or take advantage of trade discounts. A factor company has the ability to fund, or factor, your accounts receivables to give you access to cash beyond your equity. It is based on the strength of your customer’s credit, not yours.
Invoice factoring provides your business with flexible and immediate cash. In essence, you get access to cash without having to give up equity, and you have the availability to access funds as often as you need it. The two types of factoring frequently used include:
- Discount factoring, also known as recourse factoring, provides your business with immediate and flexible cash. A factor handles all the details of processing the payment, including working with your customer to ensure timely payment. It allows up to 95% of the eligible funds from the invoice immediately after you send it out to your customer. Once your customer has paid, you’ll receive the rest, less the factoring fees.
- Traditional factoring, also referred to as non-recourse factoring, is used for domestic and import/export situations. It provides your business with outsourced credit and collection services in addition to optional funding. It is one of the oldest forms of business financing and is an ideal option that offers extended protection from credit risks of your approved customer or account debtor.
Universal Funding facilitates factoring for domestic transactions, so we only provide recourse factoring. To minimize risk to all parties we can also manage accounts receivable insurance. Working with a factor company can increase and decrease funding based on your current business size and needs. It’s a scalable financing program that grows as your business grows.
The Right Solution for Your Business
Working with a factor company to finance your accounts receivables can ease your cash flow issues and minimize credit risks. It is an excellent solution for any size business and any dollar amount. By financing your invoices, your funding issues are alleviated so you can focus on growing your business.
Every business has unique needs, and your business model dictates your exact financing requirements. Complete a rate form now and one of our funding specialists will discuss options with you to find the best solution to get your business the money it needs fast.