FACTORING FOR
BUSINESS
HOW DOES INVOICE FACTORING WORK?
The idea behind how invoice factoring works is simple. You deliver a good or service and send the proof of delivery to the factoring company to get paid right away. No more billing yourself and waiting 30, 45, or even 60 days for payment from the customer. There may be a specific amount advanced (usually between 70-97%) with a percentage fee taken from the total invoice amount.
WHY MORE BUSINESSES CHOOSE STEELHEAD FINANCE FOR THEIR INVOICE FACTORING NEEDS
Steelhead gets you paid fast on your invoices. Get quicker credit decisions at no extra cost to your business. You may need to know if you can move forward with a potential customer within a short amount of time. Credit response time can be an important factor for your business and Steelhead takes that seriously.
INVOICE FACTORING IS AN ALTERNATIVE TO LOANS FOR YOUR BUSINESS
Many businesses utilize invoice factoring instead of a standard loan. Extra cash can be obtained by means of a factoring company rather than working with a bank or lender. Unlike a loan, factoring doesn’t add debt to the balance sheet. Banks can offer little leverage to meet additional borrowing needs.
FACTORING ALLOWS YOU TO OFFER BETTER PAYMENT TERMS
Many small to medium businesses struggle to balance receiving quicker payments and the need to collect payments in full. Smaller businesses don’t usually have the resources to negotiate longer payment terms without the risk of losing business opportunities. With the use of factoring, businesses have the luxury of more flexibility with longer payment terms that are offered.
HOW BUSINESSES MAKE THE BEST USE OF INVOICE FACTORING
Many businesses capitalize on the use of invoice factoring for any number of reasons which include:
- Meeting Payroll Needs
- Hiring New Employees
- Purchase New Supplies for Projects
- Buying More Inventory
- Settle Payables
- Other Expansion Possibilities
WHAT INDUSTRIES CAN UTILIZE INVOICE FACTORING
- Transportation
- Staffing
- Service
- Manufacturing
- Retail
- Distribution
- Wholesale
- Professional Services
HOW TO QUALIFY FOR INVOICE FACTORING
When you look to get started, there are a few things that your invoice factoring company will look for to determine eligibility. The most important component is the credit worthiness of the customers themselves. Poor customer credit doesn’t necessarily disqualify the business from factoring but may disqualify that specific customer from being eligible to be factored.
HOW MUCH DOES INVOICE FACTORING COST?
There is typically no cost up front to factor invoices but there is a fee taken from each invoice. A normal factor advance can range from 70% to 97% depending on industry and factoring arrangements. The fee is typically contingent upon contract term and factored volume. This fee can range from 1% to 5%.
