What is Accounts Receivable Factoring?

Accounts Receivable factoring helps small to midsize businesses get paid sooner by providing immediate cash advances for outstanding invoices. In other words, the business sells its invoices to a third party (the factor) at a discount to ultimately get paid faster—usually within 24 hours. Factoring fills the money gap and creates a predictable and dependable source of cash for businesses.

Factoring accounts receivables allows the business owner (you) to receive up to 97% of the value immediately. Then, the factoring company gets paid by your customer.

There are two types of factoring to consider, recourse and non-recourse. Recourse factoring requires the client to ultimately take responsibility for the payment of the invoice. Non-recourse factoring allows companies to sell their invoices to the factor who assumes the credit risks for the collection of the invoices.

Accounts Receivable Cash assists in creating custom invoice factoring plans tailored to your industry. We will become an expert on your business and advise the best factoring schedule pertaining to your business plan. We offer flexible AR factoring solutions for both start-ups and established companies. No matter your industry, your business is capable of turning their unpaid invoices into immediate cash.

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So How Exactly Do You Factor Your Accounts Receivables?

  • Every transaction begins with an invoice. The invoice must be accurate, unpaid, and for goods or services provided for another company.
  • Submit the invoices you wish to factor. The factor will verify the invoices and advance you cash—up to 97% of the original invoices within 24 hours. The remaining amount is held in reserve until the customers pay.
  • Once the amount is paid by your customer, the factoring company will send you the remainder of the reserve minus a small factoring fee.

Poor Credit? Don’t Panic.

Factoring companies approve clients based on the creditworthiness of their customers rather than on personal or company credit. If your customers are reliable chances are you will be approved for factoring your accounts receivables. AR factoring is a great way to build your company’s credit. The immediate cash provided as a result of invoice factoring can help your business to grow.

What types of business factor their invoices?

Accounts Receivable Cash helps businesses in a variety of industries factor their invoices. Some of these industries include transportation, staffing agencies, government agencies, manufacturing, oil and gas and security guard staffing companies.

Accounts Receivable Factoring Benefits

  • Factoring does not create debt
  • Factoring helps eliminate bad debt
  • Factoring creates better credit worthiness
  • Factoring grows your business
  • Factoring is cost effective
  • Factoring takes the stress out of invoicing
  • Factoring companies can provide you administrative support
  • No monthly minimum or maximum amounts are required for invoice factoring
  • No long-term contract required

Common Misconceptions About AR Factoring

Accounts receivable factoring is not a loan. Unlike a traditional bank loan, accounts receivable factoring companies do not offer a fixed line of credit. With factoring, as your sales increase so does your access to immediate working capital.

Companies who factor are on a downward spiral. This is untrue. Many companies have customers who are reliable but slow to pay. Factoring provides these businesses with the capital they need to make weekly payroll, buy supplies and pay their other expenses without creating debt on their balance sheet.

Contact Accounts Receivable Cash Today

ARC is ready to help you factor your accounts receivables today. Aside from financing accounts receivables we also offer unsecured business loans and merchant cash advances. Unsecured business loans are for small businesses in need of working capital, these loans do not require any type of collateral. Merchant cash advances are a type of small business loan that is equipped for small businesses that are B2C.

Let us help you begin factoring your invoices, or acquire an unsecured business loan or merchant cash advance today by calling us at 866-937-8146.