Turn Eligible B2B Invoices Into Working Capital

Invoice factoring is the sale of eligible accounts receivable to a factoring company at a discount. The factor advances part of the invoice value, collects from the business customer and releases any reserve minus agreed fees. Approval often depends heavily on the credit quality of the invoiced customers and validity of the receivables.

• B2B companies issuing invoices with future due dates.
• Staffing, logistics, manufacturing and wholesale businesses.
• Companies growing faster than customer payment cycles.
• Businesses with creditworthy commercial or government customers.

1. Submit invoicesSubmit an invoice schedule and customer information.
2. VerificationThe factor verifies eligible invoices and customers.
3. AdvanceAn advance is provided on purchased invoices.
4. Customer paymentThe customer pays the factor according to the invoice terms.
5. Reserve releaseThe reserve, less fees and adjustments, is released.

• Advance rate.
• Factoring fee and how it accrues over time.
• Recourse versus non-recourse terms.
• Reserve percentage.
• Contract minimums and termination fees.
• Customer-notification and collection process.
• Eligible and ineligible invoice rules.

Is invoice factoring a loan?

No. Factoring is generally a purchase of eligible receivables. The transaction and recourse terms should be reviewed carefully.

Will customers know invoices were factored?

In many arrangements, customers receive payment instructions directing them to the factor. Notification practices vary.

What does recourse mean?

Recourse generally means the business may need to repurchase or replace an invoice if the customer does not pay under specified circumstances.

Can consumer invoices be factored?

Most commercial factoring programs focus on eligible B2B or government receivables, not consumer invoices.

Does bad credit prevent factoring?

Not necessarily. Factors often emphasize the creditworthiness of the invoiced customers, but they still review the business and invoice validity.

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