Invoice factoring is an excellent alternative to a traditional bank loan when your business has an immediate need for cash. Accounts receivable factoring companies can provide you with funds so quickly because they are purchasing an asset, your invoices, rather than approving you for a loan. The process is much less complicated than a traditional bank loan, with a few simple steps for your business to take.
1. Application Process
The application and approval process for invoice factoring is straightforward. Your business will provide the factoring company with the most recent accounts receivable and accounts payable aging reports and a sample invoice. You will need to provide minimal paperwork for your company with the application. Approval and funding usually is completed within a few business days.
2. Invoice Transfer
The factoring company will now take ownership of your invoices. This is not a complicated task for your company:
- You will send the invoices to your customer, and copies to the factoring company.
- Your Account Executive at Universal will prepare a letter or email for your customers introducing the factoring company as your new accounts receivable management company.
- The factoring company confirms the changeover with your customers and instructs them on payments going forward.
3. Transaction Completion
At this point, the transaction is completed for your business. Any further responsibility on your end is unlikely. In the case of unpaid invoices beyond 90 days, you can choose to swap out that invoice in exchange for a new one or you can buy it back.
Since factoring involves the sale of an asset, your invoices, there is no need to schedule monthly payments or budget further fees or interest charges.
Learn More About Factoring
Working with a factoring company allows you to access cash quickly without a complicated loan process. Universal Funding can guide your company through the sale of your invoices and provide you with cash quickly. We can approve your application in as little as two days. Fill out our online rate form to request a no-cost consultation today.