What Do the Best Invoice Factoring Companies Do?

When comparing the services offered by the best invoice factoring companies, here are some things to keep in mind:

• what they do and which services they offer
• how their process works
• what sets them apart from other factoring companies
• whether they have the right team and adequate resources

What do invoice factoring companies do and what services do they offer?

Services Provided by Invoice Factoring Companies

Invoice factoring companies (sometimes called Factors) offer a business finance tool that allows an organization to access the working capital in unpaid customer invoices immediately, without waiting for customers to pay, for a small fee. The factoring fee is the cost of using invoice factoring as a financing solution.

The services provided by invoice factoring companies do not end at expediting cash flow; however. Invoice factoring companies can also help reduce organizational expenses by assuming some – or all – of the tasks associated with performing accounts receivable-related tasks like invoicing and collections.

The best invoice factoring companies might offer a variety of factoring options; such as:

• full recourse (or recourse factoring, factoring company does not assume credit risk from bad debt)
• non-recourse factoring (factoring company assumes credit risk from bad debt)
• non-notification factoring, or white-labeled factoring, done in such a way that the business’s customer is not aware the business is factoring invoices
• spot factoring – factoring only one time or only on an occasional basis
• micro factoring – factoring invoices that are comparatively small amounts (such as less than $10,000 or even less than $20,000)
• payroll loans – factoring invoices for the purposes of meeting payroll costs on a one time, occasional, or regular basis

With expedited cash flow and fewer administrative responsibilities, companies that factor invoices can stop chasing customer invoices and focus on growing their organization more quickly. In addition, since slow-paying customer accounts are no longer an impediment to cash flow, organizations that factor invoices can also extend generous terms to their clients, which can sometimes create a competitive advantage for them in the marketplace.

You might also like: Comparing Invoice Factoring Companies

How does the invoice factoring process work?

How Accounts Receivable Financing Unlocks Working Capital

Invoice factoring, which is also known as accounts receivable financing or A/R financing, provides access to the working capital represented in an organization’s outstanding accounts receivable invoices – without waiting for their customers to pay. It is essentially a two step process, and here’s how is usually works:

When a business factors an accounts receivable invoice, the factoring company buys the invoice and funds an advance (often from 90-98% of the invoice within 1-2 business days.

Once the customer has remitted payment for the factored invoice, any amount held in reserve is also returned to the business that factored the invoice (less a small fee, called a factoring fee, which usually ranges from 1-6%).

You can use our invoice factoring calculator to see how much money you might be able to unlock by factoring invoices instead of waiting on customer payments. You might also like: How does an invoice calculator work?

Getting immediate access to working capital can enable a business to implement growth strategies; such as: taking on new business, expanding product or service capabilities, filling larger orders, covering operating expenses or even simply maintaining cash flow consistent with their unique financial needs.

What sets the best invoice factoring companies apart?

Are Accounts Receivable Financing Services Right for Your Business?

Receivables financing empowers your company to expedite its cash flow by turning your invoices into immediate cash. Rather than waiting 30 days – or even longer – for your invoices to be paid, you get cash for your invoices immediately!

Turn this expedited cash flow into working capital in order to execute strategic initiatives, gain advantages over competitors, cover temporary cash shortages or improve your organization’s financial position.

What sets the best invoice factoring companies apart from other accounts receivable financing companies?

• Low factoring fees – accounts receivable financing rates as low as 1%
• High advances on factored receivables – up to 98%
• Fast funding on the same/next business day with no additional funding fees*
• No long term contracts and no monthly minimums – factor only when it is in the best interest of your business
• Professional customer service with a dedicated account manager who understands your business
• No hidden fees – no application fees, proposal fees, notification fee or account funding fees*

*Bank or financial institution’s same day wire fee may apply

The best invoice factoring companies have superior experience and financial resources.

All factoring companies are not created equal! Businesses that factor invoices want to be sure they are doing business with a factoring company that offers superior customer care, can provide a knowledgeable and dedicated account manager who understands their business, and has adequate funding and resources to service their account.

We work with some of the best invoice factoring companies in the business. And we know they are among the best because our team used to work in an invoice factoring company! We would love to help you find an invoice factoring company that is well-suited to provide your organization with the financing it needs to grow to the next level. Apply for invoice factoring or request a free, no-obligation quote: