Invoice factoring is a financial service that allows a company to sell the value of their outstanding invoices at a discounted price. The factoring company will pay you immediately for your invoices, at a small discount, and then collect on the invoices directly from your customers.
For many companies, invoice factoring is a beneficial service that shortens the sales cycle and allows businesses to collect faster on their invoices than if they had operated their accounts receivables internally.
Running an accounts receivables department can often be time consuming, and costly in-regards to day-to-day cash flows. Cash flow is the lifeline of liquidity in which a business operates and meets its growth objectives. Without working capital to meet normal business obligations, businesses struggle to make sales goals in addition to expansion.
It’s difficult to review outstanding invoices and then make the necessary calls and emails to customers to collect and actualize those revenues. For many businesses, new purchase orders are oftentimes delayed by collections of receivables. This is where a factoring company comes in and provides the working capital a business needs upon the drafting the invoice. The company would then receive the agreed upon value of the invoice in a deposit to their account, and the factoring company would then collect on the invoice value directly from the customer.
Having the capability to collect on invoices faster, provides certain agility to a business that might not have been the case with an internal accounts receivable department. Liquidity is king in providing a business the fuel it needs to actualize expansion opportunities like new facilities, or simply take on more purchase orders due to a more efficient sales cycle.
At CapFlow Funding Group, we work with our customers as partners in their business objectives. We offer a wide range of flexible terms that are designed to provide custom working capital solutions, for your unique business.
We will work with your team and consult on rates, which invoices to factor and more. It’s important to consider factoring with a company that will consult with you 1 on 1 to understand the specific needs of your business, and which invoices should be factored for quicker access to working capital.
