1. The Factoring Application
The first step in the process is helping the factoring company get to know your company. This provides basic information such as:
- Company name
- Contact Information
- Type of Business
- Information on Your Customers
2. Aging Reports
The aging report provides the detail that goes along with the initial application. This report reflects the amounts owed by your customers and the length of time it takes them to pay on the invoices.
3. How Factoring Works
Factoring is the purchase of accounts receivable at a discount. The factoring company provides an advance on approved invoices. The factor handles collection and releases the reserve balance when the customer pays the invoice. The factor deducts their fee before releasing the balance.
4. What It Costs
The volume of invoices a business plans to factor impacts pricing. The terms offered by the factor can often be negotiated and will ultimately be spelled out in the contract.
5. The Underwriting Process
The factor is very interested in the strength of your customers since they are actually purchasing the account receivables rather than making a loan. The factor will evaluate the creditworthiness and establish credit limits for each customer.
The factor will also perform a public records search on your company to verify there is clear title to the accounts receivable. This search usually includes corporate status, judgments, liens, UCC, pending litigation, back taxes, criminal records, and any other items that might interfere with the factor receiving payment on the invoices.
This due diligence process takes an average of 5-10 days on new accounts. Once the initial review process is complete it can take as little as 24 hours to receive cash for invoices with approved customers.
Discover how factoring can turn invoices into cash… FAST!
- Up to 95% Advance Rates
- Factoring Fees as Low as 1.5%
- Working Capital Without Debt
- No Long Term Contracts
- Strong Financials Not Required
- 24 Hour Funding on Approved Invoices
- You Control How Funds Are Used
- Pay Bills, Fund Growth and Increase Profits!