Factoring is a financial transaction where a business organization sells its invoices in return for money to a third party at a discount. This third party is generally a factoring company that acquires the ownership of the invoices. Once they get hold of the accounts receivables it will be their responsibility to bill the customer, collect the payments and bear the loss if the customer happens to defaults. The money you receive from invoice discounting can be used for any business purpose and the factoring company is not concerned how you use it.
Ways in Which You Can Benefit From Factoring
First of all, if you are planning to factor your invoices, then remember that you don’t have to pledge any securities or assets. You will sell your invoices in return for the money offered by the factor company. There are many ways in which you can use this money depending upon the type of business you own. You can use it for payroll solutions so that you can recruit additional staff, use it to increase your fleet if you are in transport business, you can choose technical consultant placements without having to worry about payroll, you can take up additional projects, buy new machinery or raw materials, you can use it to fill the gap for large orders, etc.
Process for Submitting Invoices
There are some good companies that accept invoices through different ways. If you are looking to avail invoice discounting services, then you can either fax, mail or send the scanned images of the invoices. You will have to provide a written or verbal confirmation. You can view the status of your factored invoice online in real time. Once your invoices are reviewed and approved, the factoring company will wire the amount to your bank account.
Tips for Factoring Your Invoices Quickly and Safely
The reputation and experience of a factor company plays a major role in the success of your factoring requirements. Picking the right company is not an easy job. You need to be careful as it involves your present and future cash flow. Here are some tips on how to factor your invoices quickly and safely. Once you have identified a company you can trust, the next step is to approach the company with some documents. These should include your accounts receivable report, current financial statement, your organization’s invoices and other business documents. The earlier you present these documents, the quicker the transaction process. In fact if your documents seem fine on review you could receive funds within a day’s time.
Tips for Getting Quick Accounts Receivables Financing Soluti