
It’s common for people to have questions about factoring, also known as accounts receivable financing. Sometimes, the unknown can be intimidating — but the good news is that factoring isn’t complicated or scary. It’s just a business solution that helps companies ease the burden on their cash flow and simplify their day-to-day processes.
Let’s take a closer look at factoring and see how it works.
Four Steps to Factoring
Essentially, factoring can be broken down into a four-step process:
- You provide a service or product to your customers.
- You send an invoice for that service or product to your customer and to your factoring company.
- Your factoring company immediately pays you a percentage of the amount due on the invoice.
- Your customer pays the factoring company the total amount of the invoice.
By handling your accounts receivable this way, you remove the burden of invoices from your business and place it onto the factoring company, thereby accessing fast working capital for your company. You get paid right away — no more waiting around on 30, 60, or 90 days A/R.
Is Factoring Right for Your Company?
If your business struggles with cash flow issues, or you wish to improve credit risk and billing efficiencies, factoring may be something to look into. There are many benefits to it — time management, fast money, low risk, and peace of mind.
When you’re not spending time chasing down past-due invoices or stressing over credit risk, life gets a whole lot easier where your business is concerned — and factoring can make all of this a reality.
Corporate Billing Can Help!
Whether you’re ready to dive in or you’re just looking for more information, Corporate Billing is ready to start a conversation with you about factoring. Contact us today for details!