Need A/R Factoring Quick? – We Factor A/R Quickly!

 A/R Factoring quickly
If you need capital quickly for a business, but you can’t get a normal loan, or you don’t want to get a normal loan, then look into accounts receivable factoring.

If you need quick cash for a business, but you can’t get a normal loan, or you don’t want to get a normal loan, then look into accounts receivable factoring.

It’s a separate source of income for your business, and it can really work to help progress your business quickly without taking on any more debt, or waiting for those customers to pay their bills. It makes use of the existing invoices that you have, but that haven’t been collected upon yet, and you are able to sell those invoices to a third party, called a factor, at a discount.

What is Factoring, Exactly?

Factoring is when someone purchases all your accounts receivables, and then they are charged with the task of collecting. You can sell your invoices to the factor directly too. The purchaser definitely can’t give you the total value on the receivables, because they’re not even sure that they’re going to collect on them. It might take a good amount of time for them to check the credit on all the customers and go through the whole collections process too. You lose a little money, but they do all the hard work. It’s a great set-up and system. They might also want to see records for the length of time that your customers have owed money, to see how likely it is that they are going to pay it at all, or quickly enough.

What Can I Expect To Get?

Factoring companies will pay based on a number of factors, like the length of time that the receivables have been unpaid, the amount of receivables, and the customers’ credit ratings. The factor will take a look at your receivables, and they will give you a first amount, probably about 80%, within a couple of days. They’ll then charge a fee for the whole collections of between 2% and 6%. The receivables may be really difficult to collect, so they might charge you more or less, depending on that. You might not get any more than 40% of the receivables that you have. That’s really an estimate though. Your numbers might be different.

Is It Legal?

Factoring is definitely legal, and it’s an industry that’s around $150 billion per year. Factoring companies are valid businesses. They make the money they have by being aware of the receivables value. Some industries have had factoring as an ordinary part of how they do business from time immemorial. Take a look at apparel and textile companies. There are businesses that do it just because they need a surge of cash to do a massive business expansion, but don’t want to take on any new debt. Sometimes, they can garner a whole lot of additional invoices through the money that they re-invest, so it all evens out.

What About the Customers?

The factoring company will definitely want to treat your customers in the right way. The factoring company wants to make sure that they get the payment. The factoring company doesn’t want to hurt the relationship that you have with your customers either because they want to make sure that your company can continue to use them in the future for even more invoices.

 

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Chris Lanchech

Hi everyone, my name is Chris and I am a junior analyst at Neebo Capital and an inspiring blogger. We enjoy speaking with business owners and entrepreneurs who come to Neebo Capital looking for cash flow solutions. Give us a call toll free at 1-888-382-3766 or Visit us online at www.neebocapital.com

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