What is Invoice Factoring?
Invoice factoring is a form of small business funding where a business sells its invoices to a factoring company in exchange for up-front funding. When the invoice is paid by the customer, the remaining balance is paid to the business owner minus a fee.
Invoice factoring allows you to receive the working capital you need to maintain operations and plan for the future, but without taking on the periodic fixed payments associated with a term loan. If slow-paying clients are stalling your cash flow, invoice factoring can help you by liquidating your outstanding accounts receivables to keep your business running.
Rather than waiting 30 to 120 days for your customers to pay you the money you need to run your business, invoice factoring provides you with funds within 24 to 48 hours.
How does Invoice Factoring work?
After submitting your invoices to the lender for invoice financing, you’ll receive the amount of the invoice minus a percentage as payment. Once the client pays you, you satisfy the agreement with the lender. While it may be helpful to have the lender collect unpaid invoices on your behalf, understand that you will have less control over the collections process and that your clients may become aware of your cash flow shortages.
Invoice Factoring Details
Safe, immediate source of cash flow
You don’t have to put up any collateral
Saves time spent on administration and chasing late payments
Can reduce the scope of additional borrowing and often has higher costs than a longer-term loan
If your client has a weak payment history or credit score, it may affect your approval
If you want to get the process started and begin funding as soon as possible, make sure to have these common invoice factoring requirements on hand:
550+ credit score
12+ months in business
$10,000+ average monthly bank deposits
We at GRL Capital Partners want to make the funding process as efficient and simple as possible for you. Therefore, minimal documentation is needed for your application:
Signed one page funding application
3-5 most recent months company bank statements
Unpaid Customer Invoices