Receivables Factoring- Step by Step

Regardless of what you may have heard, when it comes to ensuring the viability of your business, you have to explore all of your financing options. And, if you are like many other cash strapped companies, receivables factoring is one way to get the cash you need quickly.

If you are in need of cash and are considering receivables factoring, here are a few things you will need to know before you get started.

invoice factoring in 3 easy steps

Step 1 –Application

Step one for getting started with receivables factoring is to complete an application. The application process is much like a traditional interview. The application doesn’t qualify you or disqualify you from factoring invoices as much as it is a way for the factor to become better acquainted with your business model and to assess the lowest factoring rates possible.

Step 2 –Documentation- Due Diligence

After you complete the application, you will need to provide some documents that will support the information provided. In most cases, this documentation will be abbreviated and only require you to provide your AR aging report, a business license, last year’s tax return and a copy of an invoice. These items help the Board to assess and determine approval.

Step 3 –Approval

The Universal Funding Board will review the application and documentation to ensure that there are no liens against your AR that can prevent them from collecting on the invoices. Arrangements can be made in these scenarios. They will also verify the creditworthiness of your customers and assign a value to your invoices. At this point, the team will prepare a written agreement outlining the sales transaction and present it to you for execution. If you agree, the transaction is closed and you’ll get your money in 24-48 hours. It’s that easy.


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