What is Invoice Factoring?

 

You may be thinking, “What is invoice factoring—and how can it be beneficial for my business?” You simply sell your accounts receivable (invoices), minus a small discount, to an invoice factoring company. After checking out the creditworthiness of your invoiced customer, factoring companies advance up to 100 percent of the invoice, providing immediate cash flow for you to use for your business needs.

 

In a recourse factoring agreement, you’re likely to see 100 percent advanced, while a transportation company with a non-recourse factoring agreement would likely see a 90% to 97% advanced, and a business factoring agreement would likely see up to 95% advanced.

 

Also, when your customer pays the invoice, the factor remits the balance, minus a fee, to your business.

So instead of waiting 30 to 120 days—or even longer—to receive your customer’s payment, get your invoice funded within 24 to 48 hours.

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Don't have an assigned factoring? No Problem! To learn more about how invoice factoring works, feel free to contact us at FGL—we’ll be happy to address all of your comments, questions, and sign you up! We look forward to hearing from you!