Invoice Factoring What Is It And What Are The Benefits?
Are you a business owner who wants to increase monthly cash flow, working capitol, and improve your credit rating? Then invoice factoring could be right for you.
Invoice factoring is the process by which businesses sell their invoices to a third party, called a factor. The factor buys the invoices for about 3 to 5 percent less than the invoice is actually worth. If your business produces any type of invoice, then your business can take advantage of invoice factoring.
Once the factor purchases the invoice, then the factor owns it, and collects the debt from your client. As the business owner, you get to decide which invoices to factor, based on your customers credit and payment history with your business.
Factoring your invoices means your cash flow does not suffer while you wait for your customers to pay. The factor buys the customers debt, improving your working capitol and the credit rating of your business.
It works like this: You send an invoice to your customer. Then you inform your invoice factoring company that you have sent the invoice, and in what amount. Usually, that can...
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