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Companies that need immediate cash flow may be considering the possibility of factoring receivables to receive access to financing. Any business considering financing options should be aware that the options available from factoring companies tend to be much more flexible than the options available from traditional banks.

Banks may offer a line of credit that is based on the financial health of the business. There will be an interest rate related to the line of credit that must be paid on any balance of the line that is used and not paid back immediately. Credit lines contribute to the total debt of a company and may negatively affect the view of a company from the perspective of a current or potential investor.

There is a substantial risk that a company that is struggling and needs financing to stay in business will not be eligible for bank financing. However, factoring is a practise that uses the expected income that will be realised by the business according to their current receivables. Because the financing option uses resources that the company currently holds, the ability to secure financing is much more likely than with bank financing options. The fact that the factoring company is purchasing verifiable receivable income means that the business will likely be eligible for cash according to the amount of receivables currently outstanding.

Factoring companies typically purchase accounts receivable at a slight discount. While this may seem like a disadvantage, the immediate inflow of cash into the business allows the business to lower interest paid on outstanding debts and even make investments that could net returns greater than the discount related to the accounts receivable that are sold.

If your company is considering a variety of financing options available from banks, be sure to include the services of factoring companies in the mix. More companies are eligible for this form of financing and can secure cash funds within a few business days. There is no need for the business to take on more debt when funds are secured through this financing option, and the cash flow is immediate. Whether a business needs cash to pay for advertising, debts, expansion of the company or to take advantage of a business opportunity that is only available for a limited amount of time, this unique financing option gives businesses the opportunity to receive needed funds without taking on the responsibility associated with a line of credit.

Invoice Discounting Rates Starting at 1.59% to 3.5%

  • No monthly requirements.
  • No financials needed.
  • No setup fees