Invoice Factoring: How it Works

Now more than ever, funding is crucial in the business world. Whether you're a small, family-owned store or a fledgling franchise, factoring companies in Alpharetta, GA, can help you get the money you earned right away. Let's take a look at the factoring process and how it works. 

What is Factoring?

Factoring, also known as financing receivables, involves a business selling its open invoices at face value, minus a discount fee, to a factoring company. This allows businesses to get their money immediately, rather than waiting anywhere from 30 to 90 days to receive payment from customers. Invoice factoring companies will pay cash up front for a percentage of the invoice value, and then collect the payment from your customers, taking just a small fee and giving you the rest. 

The Process

This is a popular option for many businesses because it is simple, easy, and effective. The straightforward process makes it possible for small businesses to focus on more pressing matters while the invoice factoring company does the rest! First, you would deliver goods or provide services to your customers as normal, sending an invoice to both your clients and your chosen factoring company. Within hours, factoring companies will pay you for up to 97% of the invoice, meaning you no longer have to wait so long to get paid! Once the invoice is due, whether that be in 30, 60, or 90 days, the factoring company will collect from your customers on your behalf. Then they will pass the rest of the balance on to you, taking only a small fee for their services.

The Benefits

If that process sounds short and sweet, that's because it is! More and more businesses are choosing to go the factoring route because they appreciate all the benefits, including getting paid upfront and not having to chase after invoices. Factoring is not a loan, and it won't impact personal or business credit in any way. It's also easy to qualify for factoring, and businesses can start the process immediately. In the competitive business market, having the funds to support your endeavors can make all the difference. By receiving your funds right away, you can continue to grow and expand your small business. It's hard to build your brand and business when you're always waiting on money, but factoring companies in Alpharetta, GA, are changing the game and making it all possible.