Account Receivable Factoring, A/R Financing, Factoring

Accounts Receivable Factoring… Fast, Easy, Reliable Access to Cash

It is common for a business to struggle with cash flow. Whether cash flow problems are temporary, seasonal, or a constant problem for a business, Strategic Business Funding can help solve the problem. Factoring or accounts receivable financing is a valuable tool for many businesses. Factoring allows businesses to sell their accounts receivables at a discount, so they can immediate access the cash they need to operate and grow their business.

Ready to get started? Fill out our Fast Form and we’ll get to work today, helping you get the cash you need to run your business. Or give us a call and we’ll be happy to assist you or answer any questions you have.

How Does Factoring work?

Once a company sells its products or service, it will invoice the person/business they sold to. Often times a business will provide terms for its customers. Common terms of an invoice are between 30 and 90 days. Sometimes this creates cash flow problems for the company since they have already incurred costs to create and deliver the product or service. So instead of waiting to receive payment on the invoice, the business can elect to factor its account receivables and receive money immediately.

First, your company will pick out what invoices it wants to be factored. Many companies will choose to factor 100% of their receivables because it makes doing business so much easier. The factoring company will then check the credit worthiness of the business that is being invoiced. Once an invoice is approved for factoring, the factoring company will advance a percentage of the invoice to the company (Typically 80%-90%). The rest of the invoice amount is held in a reserve account. Once the factoring company receives the payment the reserve amount is paid to the company minus the factoring fee. This process can be repeated as needed for your company.

What are the Advantages of Factoring?

Factoring Gives you Quick Access to Cash

The obvious advantage of factoring is to alleviate cash flow problems. However, for some companies, it may be one of their only financing options. Often times start-ups companies or businesses that have been operating for less than two years have trouble accessing business capital through traditional financing. Factoring can be a solution for them.

Easy to Set Up with Limited Paperwork Burden

Factoring is also easy and quick to set up. It can usually be done in a matter of days with limited financials. In fact the credit worthiness of the customer you are invoicing is the determining factor. That means that your company’s financial records will not be scrutinized and you don’t have to spend hours preparing paperwork or in interviews. Factoring is totally flexible. It is up to the business to decide how many invoices to factor. For instance, a business may find that it only needs to factor half of its invoices to obtain the funds they need at that time.

Achieve a Sound Balance Sheet Presentation

Factoring will not show up on a company's financial statements. It is what's called off balance sheet financing. This will give the company a healthy appearance when someone looks at its financials. Also the company will not be required to give up equity or collateralize any assets to obtain factoring.

Eliminate Collection Headaches

Some factoring companies will actually act as your full service in-house credit department. How much easier would life be if you did not have to hire, train, and retain qualified credit department personnel? You get to choose the level of service you want from your factoring company.

Factoring is Flexible & Grows with Your Business

Factoring easily grows with the company. As a business grows and creates more revenue, more invoices will be available as sales grow. Finally, the cost of factoring can be built into the cost of goods or service. This allows your customers to enjoy credit terms while your business benefits from immediate cash flow.

Ready to start factoring? Contact us using our Fast Form now!