How Invoice Factoring Works

How Invoice Factoring Works for Businesses

Many businesses are facing challenges. Ongoing effects of pandemic lockdowns, inflation, and supply chain issues are all making it difficult to maintain steady cash flow. Invoice factoring is a type of financial service that can be helpful, even for businesses that may not qualify for traditional funding like a bank loan or commercial loan. Let’s look at how factoring works, its main benefits, and how a business can apply for it.

Get Paid Faster With Invoice Factoring

You don’t have to wait on slow paying customers with invoice factoring. Check out the easy steps to get paid for your invoices in as little as 24 hours. 

Why Wait?

Start getting paid immediately

How Does Invoice Factoring Work?

Any business that invoices its business customers then waits to be paid can apply for invoice factoring. It’s a type of financial service in which the factoring company purchases accounts receivable, allowing the client to receive immediate cash. Factoring helps businesses improve cash flow, providing working capital now, when it is needed to cover operating expenses and allows the company to take on more business. Invoice factoring shields them from the lag time involved in invoicing then waiting to be paid, plus rids businesses of the uncertainty from customers who may pay late.

In an ideal world, when businesses send out invoices, they are paid promptly. In the real B2B world, however, customers often require extended payment terms such as 30 – 60 days. When your customers are themselves having cash flow problems, it can delay payments. When invoices are factored, you are assured of receiving payment on a consistent schedule.