Invoice Factoring
Intrepid offers six major ways through which customers can access capital.
These include venture capital, assessed-based loans, lines of credit, accounts receivable financing, equipment financing, and invoice factoring.
What is invoice factoring? It involves selling accounts receivables to a factor ( third party) to meet immediate cash needs. As an invoice factoring company, we provide our customers with cash flow support by purchasing their invoices (accounts receivables).
Small business invoice factoring is very popular with both online and traditional alternative lenders. You mustn't confuse online lenders with banks. Unlike traditional banks, online lenders offer the right solution for your business efficiently. Other amazing features of secure online lenders include:
- Fast or even instant online decisions
- Very quick funding
- More accesible solution
Therefore, doing business with invoice factoring companies allows you to enjoy several positives such as immediate opportunity to get capital for your business, faster and easier approval, and your credit score is not in any way impacted.
Cash flow Improvement and Invoice Factoring
Invoice factoring companies prioritize helping business owners with B2B customers, fair or poor credit, and few or no assets to borrow against. Also, they are available to support if you provide payment terms between 30 and 90 days or if your business has a limited operating history. With any of these invoice factoring companies such as Intrepid, you can easily benefit and streamline your process with this service. This is because their mission is to offer commercial lending solutions by assisting small to medium-sized businesses who want to grow their capital or desire creative alternative financial solutions.
Always remember that invoice factoring is a reliable source of funding that can quickly turn your receivables into cash.
The Right Invoice Factoring Companies
There are tons of non-reliable and services when you search for invoice factoring companies. Working with a professional finance company is vital so you may focus on your business. Some of the things you must know before making a contract include:
Recourse Factoring or Non-Recourse factoring
For resource factoring, you have to pay back the company if the payment is not paid by your customer. For non-recourse factoring, the factor takes responsibility for the loss, if the payment of the invoice is not made by the customer.
Spot Factoring or Whole Ledger Factoring
You are permitted to factor only one invoice under spot factoring while under whole ledger factoring, you can factor together all your invoices.
You need to consider the industry such invoice factoring companies serve as well. Invoice factoring is great for startups and small B2B businesses in any of the industries below:
- Wholesale and Distribution
- Transportation and Trucking
- SaaS
- Cannabis
- Food and Beverage
- Manufacturing
- Staffing
- Consulting
- Oil and Gas
- Apparel Companies
- Professional Services
- Janitorial Services
Eligibility Criteria For Invoice Factoring
The following is the list of eligibility criteria for invoice factoring:
- You must have a business
- Your business must have government or commercial clients
- The commercial credit of your client must be good
- You must have profit margins that are above 10% to 15% (varies)
- Your invoices must not have encumbrances or liens
- You must have a payment plan if you have a tax lien
- You do not have an open bankruptcy
- You must have good character (shown by your personal background)
FAQ'S
Generally, it determine the rates and fees of invoice factoring. These include:
- The creditworthiness of your customers
- The size of your borrowing need
- Whether all or only select invoices will be financed
- Invoice amount and the age of your receivables
Depending on the aforementioned factors, the average factoring invoices costs fall within the range of 1% to 5%.
The three parties involved in a factoring transaction include:
- Your Business (the seller)
- Your Business’s Customer (The Debtor)
- The Factoring Company (The factor)
The steps in invoice factoring are:
- Deliver your product and send an invoice to the customer
- Submit the invoice to the invoice factoring company for funding.
- Deposit (80-90% of the invoice value) is made to the Seller’s business bank account.
- The Debtor pays to the invoice factoring company.
- The factoring company pays the remaining 10-20% to the Seller (minus the factoring fee).
Invoice factoring is a financial transaction characterized by the selling of accounts receivable (invoices) to a third party (factor) to get cash upfront in turn. As a type of debtor finance, invoice factoring has nothing to do with your credit like bank financing. This is mainly because it is a sale and not a loan. Invoice factoring helps small businesses to get the cash value of their invoices before they are paid by their customers.
Yes, factoring invoices is a very good idea. This can be attributed to the benefits it offers. Invoice factoring companies ensure that their customers are provided with cash flow support via the purchase of invoices. Besides, customers tend to enjoy immediate cash flow, ongoing cash flow, a better chance of getting approved, no collateral process, improved customer relationships, and more time during the business day to attend to other responsibilities.