Invoice Factoring for miniature Businesses

Do you sell products or services to commercial or government customers? If you do, then you must be very familiar with having to wait 30, 40 or even 60 days to acquire paid by your clients.

Most expansive businesses can afford to wait. Unfortunately, few puny business owners can afford to wait – and worse – most miniature business owners do not retract into anecdote that they will have to wait to catch paid when they first commence their businesses.

But what if you can’t afford to wait 60 days to gain paid? The best solution is to factor your invoices.

Factoring is a financial tool (similar to a line of credit) that eliminates waiting to accumulate paid by your clients. Factoring financing provides you with money for your invoices, usually 24 hours after you submit them. It provides you with the well-known cash to pay rent, expenses and catch on recent opportunities.

Invoice factoring is an ideal tool for cash intensive businesses such as trucking, staffing, business services, medical offices and IT. It works as follows:

1. You snort a product or a service and generate an invoice

2. You submit the invoice to your client and send a copy to the factoring company

3. The factoring company advances you up to 85% of your invoice

4. The remaining 15% is held as a reserve to cloak charge backs and credits

5. Once your client pays the factor, the transaction is settled and the reserve is rebated (less a dinky fee)

And how distinguished does factoring cost? It varies on your business volume, how long your clients recall to pay and their credit worthiness. Most factors will charge a fee of anywhere between 1% and 2.3% for every 10 days that an invoice is outstanding. However, fees vary and can usually be customized to fit your needs.

The biggest dissimilarity between invoice factoring financing and a bank loan is that factoring is easy to find. Since the factor is financing your invoices, their biggest danger is that you do business with strong credit satisfactory businesses. This means that factoring is available to itsy-bitsy and original businesses, provided that you have ample clients. And as opposed to a bank, a factoring company will not ask you for endless financial reports and three years worth of audited financials.