Just about every small business owner knows that asking for a loan from a bank can be one of the most time-consuming processes ever known to man. The entire loan application is an excellent example of red tape nonsense. You have to submit the right documents, and then you have to wait days, weeks or even months. When you do hear from the bank, you may find that they only want more documents. It’s for this reason why invoice factoring in 24 hours seems so appealing.
A Standard Invoice Factoring Agreement
Part of the reason why invoice factoring is so popular these days is that it accelerates the collection process. Some businesses need money because most of their working capital is tied up in their accounts receivable. They deliver the product or the service for a client, but the client doesn’t pay cash on delivery. Instead, they promise to pay in 30 days, and sometimes the term is for 90 days. You have to wait for 3 months to get your money.
With invoice factoring, you don’t have to wait for long. This financing option isn’t actually a loan. It’s more like a sale of your invoices. You sell your invoice to the factor, and in return you get a percentage of the value of the invoice right away. So if one invoice is worth $10,000 you can get anywhere from 70% to 90% ($7,000 to $9,000) right away. You can then use that money for pressing needs, such as meet payroll or pay for utilities.
When your customer pays in full, you then get the rest of the payment, less the fees of the factor. You’ll need to pay the discount rate which is applied to the value of the invoice, as well as any fees for setting up the factoring line and for processing the invoice. In exchange, the factor often does the collecting for you.
Receiving the Advance Quickly
With some factors, you may have to wait for a few days in order to get your advance. The factor authenticates the invoice and also assesses it if it meets their standards. They may think that a particular customer of yours may be a poor risk, and they may not advance you the money at all.
But with some 24-hour invoicing service, you don’t even have to wait for a few days. In fact, you can get your advance in as little as 24 hours. If your needs are really pressing, then such speed can only be beneficial for your business. Some financial matters, such as payroll, can’t afford to be even a day late.
Immediate Factoring Approval
Sometimes, a factor may even claim they provide invoice factoring in 24 hours, meaning that your applications may be approved within 24 hours of calling and applying. For true emergencies, the impressive speed of this service can be truly helpful, and gives a very stark contrast to the slowness of bank loan application processing.