Article: Factoring Account Receivables: How It Works

 
How Factoring Account Receivables Works

The First Step:

Y
ou begin by filling out a simple client profile, which we will provide you. This profile
will cover basics such as your company's name and
address, the nature of your business, and information
about your customers.

You may need to supply an accounts receivable aging report, existing customers' credot limits,
or other related documents. Remember the factor will attempt to determine the creditworthiness of
your customers independent of their credit history with your business. We want a broader view of their
overall credit status.

During this initial stage you will also cover basic financial arrangements with the factor.
For instance, what will be the monthly volume of invoices you want to factor(i.e. how liquid do you need to be)?
What will the advance rate and the discount rate be? How quickly will the factor issue the advance to you?

In most cases, the answers to these questions will vary depending on the financial strength of your customer(s)
and the anticipated monthly sales volume to be factored. Variations between industries, length of time in operation,
and general reputation of how risky a customer of yours may be. For instance, a long list of high-risk clients
will cost you more in factoring fees than a short list of government agencies with a slow-pay history.

In the factoring account receivables business, volume is all important. The higher your volume(the dollar amount
of invoices you factor), the more favorable your rates will be.

The factor will use the client profile you submit to determine if your business is suitable for factoring.
This process is simply the factor analyzing the risks versus the rewards, using the information you provided.

Once approved, you can expect to negotiate terms and conditions. The negotiation process takes several
aspects of the deal into consideration. For instance, if you want to factor $10,000, you can't expect as
good a deal as a company that wants to factor $500,000.

During the negotiation process, you will become well aware of what it costs to factor your accounts receivable.
After you reach an agreement with the factor, the funding wheels begin to roll. The factor conducts due diligence
by researching your customers' credit and any liens placed against your company.
The factor also confirms the legitimacy of your invoice before buying your receivables and advancing cash to you

 

Factoring Account Receivables Services
For All Industries And All Company Sizes


Business Services Companies
Trucking and Transportation Companies
Government Contractors Suppliers
Security Companies Guard Agencies

Staffing Temporary Employment Agencies

 

Contact our accounts receivable factoring specialists at:

Toll Free:  888-266-0197

Online Invoice Facoring Request Form

Factoring Articles

How To Increase Your Cash Flow With Invoice Factoring


Comparing Invoice Factoring To Bank Loans

Why A Factoring Company Is Necessary


Factoring Business Benefits

Company Information    
Invoice Factoring Frequently Asked Questions
Contact us

Our Factoring Company Locations
Invoice Factoring Testimonials


Discover Why Business Chooses Us

OCF INVOICE FACTORING COMPANY
 - Providing factoring services nationwide
 - Over 70 years of factoring company experience
 - Up to 97% Advance Rates


Why Invoice Factoring is Necessary

In recent years, an increasing number of businesses have discovered
that invoice factoring can combat the ups and downs of unpredictable cash flow cycles.

More importantly, factoring companies are providing the business community
with a viable source of working capital when conventional business financing is not always an option.
 

People consider the
invoice factoring
discount a small cost of doing
business. A two-three-percent factoring
discount for a 30-day invoice is common. Compared with the problem
of not having cash when you need it to operate, the receivable credit line
discount is negligible.
Look at the invoice factoring company collecting the  discount as though your business had
offered the customer a
discount for paying cash. It works out the same.


How Invoice Factoring Works


Setting up a
factoring relationship is quick and easy in comparison
to other forms of business financing.  Applications simply call for basic
company information and a customer list.  Years of profitability are not
required which makes invoice factoring an option for startups generating accounts receivables.
 It is possible that funding can occur in as little as a couple of
days after the invoice factoring company receives your application and invoices.

Benefits of Factoring Invoices

Factoring invoices can offer many benefits to cash-hungry companies.
Rather than wait 30, 60, 90 days or longer for payment on a
product or service that has already been delivered, a business
can factor (sell) its receivables for cash at a small discount
off the amount of the invoice.

Payroll, marketing efforts, and working capital are
just a few of the business needs that can be met with this instant cash from factoring.

Factoring invoices provides the means for a manufacturer to
replenish inventory and make more products to sell:
There is no longer a need to wait for earlier sales to be paid.
Factoring is not just a cash management tool for manufacturers:
Almost any type of business can benefit from factoring.

 

Why Receivable Factoring
Appeals to the Start-Ups

Factoring is especially appealing to young and rapidly growing companies. Since the invoice factoring process shortens their business cash flow cycle, these businesses can grow faster. The ability to make more products to sell while waiting for invoices to be paid is largely eliminated. Such businesses usually net much more profit with receivables factoring than without, even when the discount is considered.

Receivable Factoring Company vs. Bank Loans

Factoring has been around for thousands of years. Factoring companies  pay cash for the right to receive the future payments on your receivables and invoices. An unpaid accounts receivable or invoice has value. It is a  debt your customer has agreed to pay in the near future.

So, why not simply go over to the friendly
banker for an account receivable loan to alleviate cash flow problems? A small business loan can be difficult if not impossible to receive, especially for a young, high-growth operation, because small business money bankers are not expected to decrease lending restrictions soon. The relationships between businesses and their small business bankers are not as strong or as dependable as they used to be.
 

Account Receivable Factoring Frequently Asked Questions

Unlike The Others, You Actually Make Money With Our Account Receivable Factoring Rates

 


OUR PROVEN INVOICE FACTORING PROGRAMS
HELP BOOST YOUR CASH PROFITS

Contact our account receivable factoring specialists at:

Toll Free:  888-266-0197

On-Line Factoring
Request Form




Partial List Of Industries That We Provide Factoring
Factoring Staffing company
Factoring Building Products Distributor
Factoring Manufacturing company
Factoring Maintenance Service
Factoring Service Providers
Financing for small and medium sized service companies
such as commercial suppliers, technology consultants
and janitorial companies,etc.

Factoring Metalized coating
Factoring Auto Parts company
Factoring Powder Coating
Factoring Cable Contractors
Factoring Utility Construction company
Factoring Machine Shop
Factoring Oil and Gas Industry
Factoring Trucking company
Financing for trucking companies,
freight brokers and commercial transportation companies

Factoring Freight Forwarding company
Factoring Healthcare Staffing company
Factoring Government Contracts
Financing for companies that provide services and products
to state and federal government agencies

Factoring Distributors
Factoring Freight & Trucking
Factoring Manufacturers
Factoring Medical Practitioners
Factoring Security Guards
Financing for companies that provide security guards
to commercial, industrial and government sites

Factoring Temp Staffing Agencies
Financing for staffing and temporary employment
in the business and medical services field

And Many More


More Links to Help You Find Information

accounts receivable loansinvoice factoring| factoring services
| factoring business| bank factoringmedical receivable factoring
| financing trucking

We are currently providing account receivable factoring services nationwide including the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho State, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.


Just Some of The Industries That we Provide Invoice Factoring Services
Freight Factoring |  Government Contract Factoring | Medical Staffing Factoring
|
Temp Staffing Factoring | Oil & Gas Industry Factoring

 


Staffing invoice factoring company
Building Products Distributor cash flow factoring
Building Products Waterproofing Distributor account factoring
Manufacturing account receivable  factoring
Maintenance Service receivable factoring
Machine Knives invoice factoring company

Custom Auto Body for Emergency and accounts receivable factoring company
Municipality Vehicles  factoring  loan
Parts and Installations business factoring
Metalized coating invoice factoring company
Auto Parts accounts factoring company
Powder Coating invoice factoring
Utility Construction receivables factoring
Machine Shop invoice factoring company
Trucking invoice factoring company
Trucking - Refrigerated Freight  factoring
Trucking - Dry Freight truck factoring
Trucking - Over the Road freight  factoring company
Security Services account receivable financing
Commercial & Industrial Refrigeration invoice factoring



You Can Learn More About Factoring Services Here

How To Switch Invoice Factoring Companies

Fuel Debit Card Programs Available For Freight and Trucking Companies
Contact Us