Accounts receivable financing allows your business to collect cash for your open invoices that are not yet due for customer payment. Your company sells open receivables to a factoring company and the factoring company collects payment from your customers once the net terms for the invoices hit their due date. The rate the factoring company applies to your invoices is determined by several variables. Here is a look at how accounts receivable factoring and advance rates are determined.
Variables That Determine Your Rates
Universal Funding will examine your portfolio to assess risk, but this is not the only measure that determines the rates that apply to your invoice sale. Several variables help our factoring company make that decision:
- The age and amount of the invoices you are interested in selling
- A risk assessment of your customers
- The credit standing of your customers
- Trends in the payment cycles of your customers
- The duration of the contracts with your customers
- Your monthly factoring volume
- Your sales volume
- The current climate of your industry
Keep in mind, most factoring companies will also consider the costs associated with managing your invoices, such as overhead for providing service to your customers and collecting payments from your customers.
Selling Your Invoices
Top factoring companies start with a low rate and adjust it accordingly based on the results of the analysis of your business and your customers associated with your invoices. The process does not require a long waiting period. A reputable factoring company, like Universal Funding, will have enough experience to determine your rates after a brief conversation. You can have your approval decision and learn what kind of factoring fees and advance rate Universal Funding is charging within 48 hours of submitting your company’s application.
Learn More About Factoring Fees for Selling Your Invoices
Universal Funding uses a proprietary risk scoring model that allows us to quickly offer your business the most cash for your invoices. Contact us today to learn more about our competitive rates by completing our simple rate form or give us at 1-855-236-4936 to speak with factoring specialist right away.