Factoring, Or Accounts Receivable Financing

Factoring occurs when a company sells it’s accounts receivables or it’s unpaid invoices to a third party. Usually this third party is a commercial financial company, also referred to as a “factor.” Factoring can guarantee cash flow in as little as 72 hours!

This type of lending is done so that businesses can receive cash more quickly than waiting for customer payments, which usually take anywhere from 30 to 60 days. Factoring deals can be completed within 24-48 hours of filling out an application. 

Factoring vs. A Bank Loan

Banks require strict requirements in order to secure a conventional business loan. This can be a timely process and the deciding factors include a combination of previous years operating histories and the owner(s) credit scores.

Factoring is much different than a traditional business loan in the way that the financial companies buy your eligible invoices at a discounted rate and advance almost all of the total amount within hours.

Because the factoring companies are more focused on your debtor’s credit, the spotlight is not on your business history or credit. The factor releases the balance of the account when the customer pays the rest of the invoice, minus a small fee for the service.

Factoring Terms

The terms and rates for payouts of factoring differ among industry types and financial service providers. Depending on your business needs, Choice Funding can purchase your invoices and advance money within 24-48 hours.

Please fill out the form below or give us a call and one of our factoring experts will gladly assist in the process.

**Please note that factoring is not a loan and that no debt is acquired when factoring, which provides a company more flexibility than a traditional small business loan.