3 Benefits of Micro Factoring for Small Ecommerce Sellers

Whether you’ve just started selling online or are ready to grow to the next level, micro factoring can give you access to working capital without taking on debt. Micro factoring speeds up your cash flow, giving you faster access to the money you’ve already earned through online sales.

Micro factoring speeds up eCommerce cash flow for small sellers

One of the most frustrating aspects of being a startup or small e-commerce business is the lack of financial leverage, as you are more than likely locked into waiting anywhere from 60-90 days to get paid. Sitting around waiting on third-party platforms (e.g., Amazon, Etsy, eBay, Poshmark, and so on) represents time wasted when you could be reinvesting in replenishing your stock, marketing, advertising, and growing, instead.

Micro factoring offers the same benefits as invoice factoring for e-commerce sellers, the only difference is the dollar amount of the invoice:

• Speed up cash flow
• Take on bigger orders or increase production volumes to sell more
• Use ready cash to get cash or quick-pay discounts from your suppliers

Many factoring companies won’t take on micro factoring clients like e-commerce sellers factoring small invoices or earning statements ranging from a few thousand to about $25,000. That’s a huge market missing out on financing that could help them grow to the next level more quickly. The good news if this sounds like your business is that we have high-quality factoring companies at the ready to give you access to the working capital needed to grow your e-commerce sales.

What is micro factoring for eCommerce?

Micro factoring is simply a smaller dollar amount form of invoice factoring. Rather than waiting on third parties to remit payment for sales you have made and fulfilled weeks or months ago, you can factor earnings statements and get paid on the same or next business day. Here’s how it works:

1. Get an earnings report from the third-party platform you sell on and factor it with a top e-commerce factoring company (we’ll help you find one!)
2. Receive payment on your earnings right away and let the factoring company wait 60-90 days for the third party to remit
3. Reinvest in your business faster – replenish inventory, purchase supplies you need for production, or expand by adding more production capacity to increase volume, and thus, profits

It’s pretty simple, really, and there’s no risk to finding out if and how micro factoring could benefit your business. Just submit a request for a free quote, and a top invoice factoring company will reach out to you with all the details.

Is micro factoring free?

Micro factoring isn’t free, but the best invoice factoring companies for e-commerce make offer high advances and low fees, often around 5-8%, or even less for larger earnings statements, or if you factor frequently. Compared to bank fees or the cost of interest payments for charging supplies or inventory to your small business’ credit cards, a one-time fee for micro factoring is likely going to be much lower.

How long does it take to get paid after factoring an e-commerce earnings statement?

Third-party e-commerce platforms like Amazon, Esty, Poshmark, eBay, Zulily and others typically make vendors wait at least 30 days, and often closer to 60-90 days after sales occur to get paid. We get it, they want to make sure the buyer is completely satisfied with no chance of a refund before sending on your portion of the earnings.

Unfortunately, though, that leaves you in the position of waiting months – essentially – to receive payment on items you have long since paid for, processed, packed, shipped, and fulfilled. In other words, the e-commerce platform gets paid immediately upon the sale, while you wait 60-90 days (and long after all the investments you made into the product and its sale and fulfillment).

If you factor e-commerce sales and earnings statements, you can get paid on the same or next business day. This brings your income earned on online sales much more in line with your cost of goods sold. It speeds up your business cash flow so you can put money into growing your online sales instead of waiting around to get paid.