What Is Invoice Factoring?

Invoice Factoring Vs Line of Credit

Invoice Factoring
Line of Credit
Collateral
Only accounts receivable as collateral
Usually all company assets
Line Increase
Simple & Quick
Complicated & Slow
Access to Funds
Easy
Easy
Maintenance
Easy
Difficult to Maintain
Cedit Limit
Flexible
Restrictive
Approval Time
2-3 days
Weeks to months
Qualification
Very little requirments
Extensive process
Cost
Based on volume
Varied on Collateral

When a business needs cash but doesn’t want to borrow money they can turn to Invoice Factoring. Rather than a bank loan, outstanding invoices are sold to a factoring company.

When your business delivers goods or services to a customer on terms an invoice is created. The average customer may wait 20, 30, or even more days, before paying the invoice.

Rather than wait for payment, your business can receive an immediate advance on the face amount of the invoice from a factoring company.

The factor issues the advance and keeps back a portion in reserve. When the invoice is paid the reserve is released,  less the factoring fee. There is no interest or loan fee charged as the process involves the assignment of an invoice rather than the creation of debt.

5 Steps to Factoring Invoices

Selling or factoring invoices is very straight forward with 5 main steps:

Step 1 – Submit the invoice to the Factoring Company or Factor.

 

Step 2 – Submit POD, rate confirmation, work order, permits or other pertinent materials.

 

Step 3 – Factor receives payment on the invoice directly from your customer.

 

Step 4 – Factor releases the reserve balance to your business less the factoring fee.

 

Step 5 – Factor invoices of your customers.

Get Paid on Invoices NOW!

Low Factoring Fee

24 Hour Funding on Approved Invoices

Pay Bills, Fund Growth and Increase Profits!

A Company that Works with You

Benefits of Factoring

Cash Without Debt

No Long Term Contracts

Strong Financials Not Required

You Control How Funds Are Used

Pick & Choose the Invoices to Factor

Learn more about these Factoring Benefits! 

Get Paid On Invoices Now!

  1. Discover how factoring can turn invoices into cash ... FAST!

  2. Up to 95% Advance Rates

  3. Factoring Fees as Low as 1.5%

  4. Working Capital Without Debt

  5. No Long Term Contrancts

  6. Strong Financials Not Required

  7. 24 Hour Funding on Approved Invoices

  8. You Control How Funds Are Used

  9. Pay Bills, Fund Growth & Increase Profits!

Call Us at (605) 645- 0640

>>Get Started Today<<

Contact Us

NBS Factoring,LLC

Po Box 25

Belle Fourche, SD 57717

Phone: (605) 645-0640

Fax: (605) 723-1646

Email: office@nbsfactoring.com

We invite you to call our office or send an email using the contact us page

Accounts Receivable Factoring Example

 

Here is an example of how the numbers might work on a factoring transaction:

  • $10,000 – Invoice Amount Customer owes Business

  • $ 9,500 – Advance Rate Paid to Business (Assumes 90%)

  • $ 500 – Reserve Held By Factor (Assumes 5%)

Invoice Paid In 30 days

  • <$250> – Fee Deducted from Reserve (Assumes 2.5%)

  • $   250 – Balance of Reserve Paid to Business

  • $9,750 – Total Amount Received by Business

The amount of the advance, reserve, and factoring fee can vary by industry, customer strength, and how long it takes the customer to pay the invoice.

Some factoring companies might charge a small one-time set up fee to the business upon acceptance.  Others will waive the set-up fee depending on the volume and length of the factoring contract. While the assumptions may vary from the example, they will always be clearly spelled out upfront in the proposal and agreement between your business and the factoring company.

How Factoring Helps

 

Factoring provides immediate access to cash so your business can pay bills, meet payroll, purchase inventory or equipment, manage overhead, fund expansion, and increase profits.  Over the years many Fortune 500 companies have enhanced their growth using accounts receivable financing.

During the challenging economy, many banks have declined business loans or lines of credit. Factoring provides an option even when banks say no since it is based on the credit worthiness of the customers paying the invoices.  This means new companies may qualify and strong financials are not required.

These are just a few of the many advantages of selling invoices over increased debt. For more information please read the Benefits of Factoring and Frequently Asked Questions!

How to Get Started With Factoring

 

If you are interested in flexible cash flow solutions with accounts receivable factoring please contact us!  We will discuss your objectives, answer any questions, and forward the factoring application.  If you want to get a head start just download the Online Factoring Application!

NBS Factoring, LLC