Here the right to outstanding invoices is sold to a third party company that is eligible to collect this debt.

If your business needs to attain the money quickly, a viable option for you is invoice factoring. The money that is stuck is the capital and the outstanding invoices can hamper the smooth flow of money. Large organizations usually have a trend of paying the invoices within a period of 60 days or more. The small business owners often find it difficult when the payment is delayed. Invoice factoring is term that is commonly heard these days and it is vital to understand about this in detail. This is a valid document that is being considered as an evidence of an incurred debt. Invoice usually consists of quantity of each item, costs, billable hours, description of services, contact address, etc. Invoice is a type of detailed bill left by vendors and outside suppliers for goods and services provided to a company. Here the total price of the services and goods received that are yet unpaid is presented with the expectation that an immediate payment will be made. A bill is a document requesting the payment for the goods or services already provided. Even though both are means of collecting payments, there is considerable difference between the two. Even though both are means of collecting payments, there is considerable difference between the two.īill and invoice are the terms that you may often get confused with. Client growth is how we measure our own success.Bill and invoice are the terms that you may often get confused with. Through our leverage of various technologies our systems and procedures provides fast and accurate factoring, simple order processing, and ease of use allowing our clients to focus on building their core business. Our Mission to provide crucial funding to small and middle tier companies that may or may not have access to adequate bank financing is responsible for our success.

Bank loans can be extremely difficult to secure and take a lot of time to process, whereas a factoring line is comparatively easy to secure and very quick to setup.įACTOR KING ® was established with a few simple goals in mind- combine 'Old World Factoring' with 'New Age Thinking'. A bank loan is for a fixed amount, whereas a factoring line is designed to grow with your business. In contrast when seeking a bank loan your bank will focus on your company's profitability and the value of the non-accounts receivable collateral such as equipment, and real estate. The great part about Invoice Factoring is that the emphasis is always on the value and credit worthiness of your company's accounts receivables.

Now imagine this process of Factoring Accounts Receivable is performed on many (or all) of the invoices that your company produces and not only have you increased your cash flow but you have compressed your sales cycle. The factor eventually receives payment from your customer and at that time deducts their fee and wires you the balance of the 20% that was being withheld. The third party is called a Factor and the transaction is simple- you submit an invoice for factoring and the factor immediately advances 80% of the invoice amount (usually in the form of a bank wire or check). So let's start with the basics:įactoring is a financial transaction whereby a business sells its accounts receivable invoices to a third party at a discount. You see Factoring Accounts Receivable is simply the quickest and easiest (and sometimes the only) way to immediately solve your cash flow issues. In this context they are asking about Invoice Factoring (or Factoring Accounts Receivable) and once explained business owners of all sizes fall in love with the concept. Each and every day we hear from business owners around the country simply asking: What is Factoring?

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