How Factoring Works
George Glumac
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Many business owners are not aware of this unique funding tool!
Learn how factoring can significantly improve your cash flow.
Money Fuels Business
When cash flow stalls, it compromises your ability to run your company. How many times have you put aside bills, lost sleep over payroll, or couldn’t pay suppliers when they asked for payment? There is a time during each month, for all growing businesses, when outstanding receivables are keeping you grounded. If only you could get paid today for the work you completed, your company would take off.
A Factor Serves as Your Cash Flow Engine
The process is called factoring. In the simplest terms, it means the factoring company advances you up to 90% of the invoice amount immediately and gives the remaining balance when your clients settle in full. You submit the invoices directly upon completion of work or product delivery. Revenue flows directly and instantly to you. No delays. No collection hassles.
Factors can often assume all credit risk and responsibility for client payment. In return, the factor receives a small fee at the end of the process. Set-up time can be as little as 2 or 3 business days. Factors allow you the flexibility to factor only when you need it, and as often as you like. The factoring company will base its approval decisions on your customers’ ability to pay, and not the credit of your growing business.
Factoring Improves Cash Flow Without Additional Debt
Factoring is not a loan, so you’re not incurring any debt. Factors purchase the invoices from you. Once the factor advances your first 80-90%, the factoring company owns the rights to the invoice and collects directly from your customer. A simple notification is used in the initial stage of the process to inform your clients of a change of remittance.
Factors ask for no equity stake in your company. You maintain full command of your business.
Customer Credit Services
At no extra cost, factors now act as your in-house credit department. If you’re thinking about doing business with a new client, give the factoring company a call. The factor will provide you with detailed information on their payment and credit history. Factors can help you steer clear of doing business with bad companies.
Customer Credit Protection*
Non-recourse invoice factoring alone is worth the cost of this product. Virtually all factors offer this additional service which is your protection if your customer goes into bankruptcy. The factor assumes all liability for the outstanding invoices without recourse to you.
Accounts Receivable Management
Factors provide online, real-time reporting. You can log on anytime and see updated aging reports, collection reports, and more. Backdate specific reports and print them out directly for internal use or accounting purposes.
A factoring company is not a collection agency, but it does have a team of callers that put in friendly reminders on accounts when they become past due. All calls are handled in a professional manner which takes all the strain off you in dealing with late accounts.
Invoice Factoring Provides Flexibility
These arrangements allow you the flexibility to factor what you want when you want. You can pick and choose the accounts that you want to factor. Some companies will require you to factor everything, but some won’t. There are factoring companies that only want you to use invoice factoring if and when it’s beneficial for you.
Win More Business
Ultimately, this is the goal of invoice factoring. With your newfound cash flow, you can now go after more massive contracts and more significant clients. The big guys often take longer to pay. It’s challenging to perform big jobs or fill larger orders when you don’t have the cash flow to sustain it.
THE FACTORING PROCESS EXPLAINED
STEP 1 – INVOICES INTO CASH
You have Open B2B or B2G Invoices and need cash now.
STEP 2 – VERIFICATION
The factor verifies your customers are creditworthy and love your product and services.
STEP 3 – SAME DAY CASH
The same day the factor wires you 80-90% of all your open invoices.
STEP 4 – BALANCE RECEIVED
In 30-60 days, your customer pays the lockbox, and you get the balance less the factor’s minimal fees.
STEP 5 – REPEAT
Repeat when you have new invoices for continued, unlimited working capital!
GET STARTED TODAY
Contact me now to explore whether factoring is a good fit for your company!
George Glumac
george@masterfundingsolutions.com
226-979-6036