Receivables Factoring vs. Traditional Financing

Receivable factoring companies offer businesses an alternative to traditional commercial financing. Receivable factoring companies purchase open invoices at a low factoring rate, giving these businesses the opportunity to secure the funding they need to expand their businesses, purchase additional raw materials, or simply cover day to day operating expenses.

The main draw for receivables financing is that it isn’t a loan. Because this is not a loan, there is no repayment obligation nor is there any debt to record in the financial statements. There also aren’t any stringent qualifying criteria.

Here’s how it works:

Companies in need of funds contact accounts receivable factoring companies and offer open invoices. The receivable factoring company makes a proposal for factoring rates and advance rates. Once the application and approval are finalized, the transaction closes with the invoices being transferred to the receivable factoring company and the funds being transferred to the business. The process can take as little as 48 hours to complete, much faster than traditional bank loans and other financing products. Once the customer pays the balance of the invoice, the remainder of the face value, minus the fees charged by the receivables factoring companies for their services, is forwarded to your business.

If you’re ready to see how receivables financing with Universal Funding will get you the funding you need, fill out a rate form or call 1-800-405-6035.


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