How does factoring work?
Factoring, also known as invoice financing, is an alternative financing method used by growing small businesses and corporations to improve their cash flow. It concentrates more on your company's growth rather than constantly fighting cash flow challenges. Unlike a bank loan, you do not incur debt or need collateral to secure the cash. Factoring professionals focus on the creditworthiness of your clients. When your customers pay your invoices on time and establish solid payment history, the factoring company pays you up front for the invoice amount. You receive the balance once your client has paid the invoice for a small factoring fee.
Features offered by factoring companies
Select a feature below to find more details
Industries served by factoring companies
Select an industry below to find more details
About factoring companies
While factoring becomes increasingly popular as a reliable source for working capital in today’s marketplace, more factoring companies are created to meet the growing need. Some factoring companies work with businesses in certain industries and others are generalists, but all have basically the same goal. Basically, all factoring companies provide upfront funding on invoices so that clients don’t need to wait weeks or months to get paid for work they have completed. How that goal is achieved and what services are provided can vary considerably. That’s what sets apart one factoring company from another.
You should expect certain basics from your choice of factoring company, including a solid reputation as a well-funded, well-run, and ethical organization. Business owners also have the right to work with experienced factoring company professionals who:
While services and customer levels vary among factoring companies, the above “bill of rights” represents reasonable expectations for your relationship with any factoring company. This Factoring Company Guide outlines a broad spectrum of available factoring services as well as brief descriptions of more than 150 factoring companies operating in North America.
You should expect certain basics from your choice of factoring company, including a solid reputation as a well-funded, well-run, and ethical organization. Business owners also have the right to work with experienced factoring company professionals who:
- Listen to you and understand your business objectives
- Explain all factoring documents clearly and ensure you understand the process
- Provide transparent rates and fees, without “hidden charges”
- Have a strong commitment to getting your funds to you as quickly as possible
- Remain honest and straightforward with you, whatever the response will be
While services and customer levels vary among factoring companies, the above “bill of rights” represents reasonable expectations for your relationship with any factoring company. This Factoring Company Guide outlines a broad spectrum of available factoring services as well as brief descriptions of more than 150 factoring companies operating in North America.