What Kind of Invoice Factoring Rates Can A Company Expect?

Invoice factoring can be a terrific way for a company to improve its cash flow. Factoring allows companies to close the cash flow gap created by the net terms they extend to their customers. However, many companies are concerned that they may be “giving away revenue” in order to take advantage of factoring. They want to make sure to minimize this expense by finding the very best invoice factoring rates.

how much will invoice factoring cost

The Time Value of Money

Businessmen understand that the present value of their account receivables is discounted by the net terms they extend to their customers. Most companies deal with this “revenue delay” by “priming the pump.” As a startup, a company provides goods or services with the expectation that there will be a delay in revenue. However, once they move past the initial delay, the pump is primed and they have a steady source of revenue.

However, it is important for the business owner to maintain the perspective that current revenue comes from past production not present production. This makes it easier to understand the time value of money as it relates to opportunity. During a market window, the ability of a company to respond and harvest the opportunity has a definable value. However, once the market window closes, the value reduces. In many cases, the only barrier a company has to harvesting the opportunity is cash on hand. In a sense, they return to their startup scenario, providing a new source of goods or services on the hope of future (additional) revenue. In this case, the fees associated with factoring are offset by the market opportunity. In a way, invoice factoring allows companies to turn the future value of their A/R into present value in order to speed up their business cycle. For many businesses, this is a positive growth strategy.

Factoring rates can start as low as 0.55% and are typically no more than 3%.  Our low rates keep the cost of factoring to a minimum while providing a fast financing solution to your business.

How Do I Get Started?

Invoice factoring is often an attractive option for B2B companies looking to improve their cash flow. Our rates at Universal Funding Corporation are very competitive and include extra services that you may not receive with another factor. Please contact us by completing our rate form today and let us show you the financial benefits of working with us.


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