What is invoice factoring?
Invoice factoring, also known as accounts receivable factoring, is a form of small business financing where a business sells its invoices to a factoring company in exchange for upfront funding. When the invoice amount is paid by the customer, the remaining balance is paid to the business owner minus a fee.
Invoice factoring allows you to receive the working capital you need to maintain operations and plan for the future, but without taking on the periodic fixed payments associated with a term loan. If slow-paying clients are stalling your ability to pay bills or meet payroll, invest in technology and equipment or hire more staffing, invoice factoring can help you bolster cash flow by liquidating your outstanding accounts receivable to meet your business needs.
Quick financing for your business
After submitting your invoices to the lender for invoice financing, you’ll receive the amount of the invoice minus a percentage as payment. Once the client pays you, you satisfy the agreement with the lender. While it may be helpful to have the lender collect unpaid invoices on your behalf, understand that you will have less control over the collections process and that your clients may become aware of your cash flow shortages.
Step 1: Invoices
Business sell invoices to a factoring company at a discounted rate. The factor company advances a lump sum up to 100% of the value of the invoice.
Step 2: Collections
The factoring company then collects all payments directly from the client. Giving the business owner freedom to focus on growth.
Step 3: Imbursement
The factor company sends the remaining balance to the business, minus any fees, which is typically an agreed-upon percentage.
Loan Amount From $10,000 - $400,000
Qualifying Criteria
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550+ credit score
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12+ months in business
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$10,000+ average monthly bank deposits
Documents Required
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Signed one page funding application
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3-5 most recent months company bank statements
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Unpaid invoices you wish to redeem
No Upfront Costs
How To Apply For Invoice Factoring
Pre-Qualify Online
Same Day Approval
Get Funded
To get prequalified, follow the "Apply Now" button and submit some basic business information.
An advisor will reach out to you within 24 hours (during regular business hours) to complete your application and discuss your business funding options.
Upon approval and accepting the offer, funds are deposited directly into your business bank account so you can use the money immediately.
Invoice Factoring: Advantages & Disadvantages
Advantages
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Invoice factoring provides a safe, immediate source of cash flow by releasing working capital that is tied up in unpaid invoices.
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Having a lender collect invoices for you can help you save time spent on administration and chasing late payments.
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Factoring provides flexibility as amounts can expand and contract with your sales volume.
Disadvantages
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Invoice factoring companies will verify your invoices with clients to ensure that they are accurate. Including a third party can affect customer relationships and also means that you will have to give up some control.
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If your client has a weak payment history or credit score, it may affect your approval.
Why Choose Us?
Unlike traditional banks and other alternative lenders, at Premier Lending Solutions, we truly care about your business. Your success is most important to us, so we’ll never over-leverage your business by giving you more funding than you can handle. Our simple application and quick approval process makes it easy for you to get the working capital your business needs, and our experienced funding consultants will walk with you every step of the way.