To get started with invoice factoring, which is sometimes referred to as accounts receivable factoring, you must meet a few criteria. First, you must own or operate a business that sends invoices to credit worthy B2B customers. Second, you should be in a position to need your outstanding invoices to be paid quickly rather than wait 30, 60 or 90 days. Finally, you must find a reputable invoice factoring company that can help.
Invoice factoring is a smart and easy way to generate working capital for your business without having to open a loan or a line of credit with a bank. When invoice factoring is utilized, you do not have to worry about paying interest or about making minimum payments to a bank each month. The process of invoice factoring is very different from that of applying for a bank loan. Essentially, an invoice factoring company evaluates the credit worthiness of your customers, not of you. With a bank loan, it works the other way around—the bank evaluates your credit worthiness and not that of your customers.
The best invoice factoring companies for you are generally those that specialize in helping businesses that operate within your industry. Experience matters when it comes to invoice factoring – and the more an invoice factoring company understands your specific industry, the better. It is the job of an invoice factoring company to spend time with you and to learn as much as possible about your business. The invoice factoring company will explain the many benefits of invoice factoring and how it can be used to your advantage.
To get started with accounts receivable factoring, make sure to follow these steps:
Learn as much about invoice factoring as possible. There are many ways to learn about the invoice factoring process, including what it is, how it works, and how it can benefit your company. It is a good idea to read articles and information posted on various finance-related websites. But one of the best ways to ensure you are provided with the most accurate information is to contact a highly regarded accounts receivable financing company so that you can ask direct questions. The most reputable companies will spend time talking with you and explaining the process to you in full detail.
Make sure your business is a good candidate for invoice factoring. You might be an excellent candidate for invoice factoring if you 1) own a business, 2) have B2B customers that hold your invoices for a lengthy period of time before paying them, 3) have credit-worthy customers, and 4) have a business that frequently or occasionally experiences cash flow issues.
Understand exactly how invoice factoring might help your business. Again, one of the best ways to get a firm grasp on exactly how accounts receivable financing can help your business is by contacting a top-rated invoice factoring company and asking questions. In many cases, invoice factoring is one of the best financing options available to a business because it does not involve taking out a bank loan that requires monthly payments or the obligation to pay interest on money borrowed.
Find an invoice factoring company that knows your industry. Many invoice factoring companies specialize in helping businesses within certain industries. If you are considering invoice factoring and you want more information, make sure to contact a factoring company that has helped businesses in your industry and also truly understands the way your type of business operates.
Apply to be an invoice factoring client. After you select an invoice factoring company, you will be provided with specific instructions on how to get the ball rolling. This should be an easy process, and usually involves the completion
of an application and submission of no more than two or three supplementary documents. Once your business is approved, the accounts receivable financing process can begin.
The benefits associated with accounts receivable factoring are numerous. One of the best ways to learn more about the invoice factoring process is by contacting several reputable invoice factoring companies. Then narrow down the list of companies to one or two excellent options. Word-of-mouth referrals or excellent online reviews are a good way to make a selection.
A trustworthy invoice factoring company will spend time talking with you and helping you determine if your business should move forward with accounts receivable factoring. If you agree that invoice factoring is a good option, the company will assist you with all of the required steps. Excellent customer service, including the ability to answer all of your questions and concerns, is an important quality in the invoice factoring company you select.
There is no reason to operate in a cash-strapped fashion as you wait for your outstanding invoices to be paid. Learn more about invoice factoring today, determine if this type of financing will help your business, and get started on your application as soon as tomorrow.
Editor’s Note: Greg Curtiss is President of The Invoice Bankers. Mr. Curtiss previously was a lawyer and has passed the CPA exam. He has been in business for over 25 years. You can reach him by calling 303-740-7600 or 1-888-740-1750.