How Factoring Works

How Factoring Works

Companies of all sizes experience cash flow shortages, even during periods of business growth. It is common for a company to be very busy with new orders, yet short of money to meet current operating costs. Unpaid invoices can cripple a company.

Large companies can withstand periods when accounts payable exceed receivables by tapping into cash reserves. Small and medium-sized companies or startups may not sufficient cash reserves. For these businesses, factoring their outstanding invoices may be the solution to their cash flow problems.

How Does Factoring Work?

Factoring is the sale of your company’s outstanding invoices at a discount from their face value. Your company gets instant cash from the factoring company without having to wait for payment from the customer. The factoring company gets back the money it paid to your company plus its profit when your customer makes payment on the invoice.

Factoring gives your company the cash it needs to use as it wishes for such things as:

Is Factoring Right for Your Company?

Factor Funding Company has been offering factoring services to small and medium-sized businesses for years. They know that invoice factoring may not be right every company. Your company may be helped by factoring services if it is experiencing any of the many challenges that confront new or growing businesses, including:

What are the Benefits of Factoring for Your Company?

Factoring offers your company immediate cash for your invoices without the burdening your bottom line with repayment. A company with cash flow needs does not want to add another monthly payment to its accounts payable nor can it afford to go through the paperwork, collateral requirements and delays associated with bank loans.

For more information on the how factoring can benefit your company, contact Factor Funding Company at 866-717-2274.

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