ACCOUNTS RECEIVABLE FACTORING
FINANCING EXPORTS WITH ACCOUNTS RECEIVABLE
Accounts Receivable Factoring provides an easy solution for companies that need immediate liquidity because it creates an immediate influx of cash from the invoices already on your books.
Accounts Receivable Factoring Overview
Accounts Receivable Factoring services that deliver fast liquidity for your business. This is the ultimate export financing solution. We provide Accounts Receivable Factoring services for exporters that factor or sell their foreign accounts receivable. The accounts receivable are sold at a discount but they are also sold without recourse, which means you have no continuing liability or exposure of any kind. That is incredible peace of mind for business owners.
Factoring accounts receivable is an ideal solution for small businesses who are exporting overseas and offering financing terms to your foreign buyers. We provide you with an immediate influx of cash from the invoices that are already on your books or which will be created upon the export of goods to your foreign buyer. You access cash immediately without having to wait for payment from overseas buyers and without any exposure to payment default. You’re paid in full and working on your next deal.
We offer accounts receivable factoring as needed or on a continuing basis. Factoring accounts receivable provides companies the ability to offer terms to international customers but still receive cash when the goods are delivered. We are fast, decisive and will provide the financing your business needs, usually within ten days if we haven’t done business before. We’re much faster if we have an established relationship, where we can often provide the liquidity you need within 48 hours.
Accounts Receivable Factoring
Factoring accounts receivable is a common method of export financing that provides exporters with liquidity by factoring or selling their accounts receivable. The accounts receivable are sold at a discount but they are also sold without recourse. Factoring accounts receivable is an ideal solution for companies that need extra cash for inventory, payroll or marketing because it creates an immediate influx of cash from the invoices already on your books. Companies can access quick cash from their invoices to start their next project. Factoring accounts receivable can be utilized as needed or on a continuing basis. Factoring accounts receivable provides companies the ability to offer terms to international customers but still receive cash when the goods are delivered.
Traditional factoring is an ideal solution for companies that need extra cash flow to purchase inventory, cover payroll or invest in marketing. You are able to create an immediate influx of cash based on the invoices already on your books. The finance provider, known as the factor purchases all of your accounts receivables and advances you 70% to 90% of the total amount within 24 to 48 hours. The factor pays you the remainder of what you’re owed once your client pays the factor, usually 30 to 45 days later. It deducts a small fee, based on the size and age of each invoice.
Accounts Receivable Factoring, which is known by several names, is commonly called accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing, although accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable.
Accounts Receivable Factoring is a financial transaction that is a common method of trade finance that provides immediate liquidity to companies that sell their accounts receivable at a discount. Although the discount in the face value of the accounts receivable is a cost, companies benefit in converting their accounts receivable to immediate cash, and their accounts receivable are typically sold without recourse.
Factoring is often an ideal solution for companies that need extra cash for inventory, payroll or marketing because it provides immediate cash based solely on invoices already on their books, so it requires no borrowing. Companies can access quick cash from their invoices to start their next project. Accounts Receivable Factoring can be utilized as needed or on a continuing basis.
In the world of global trade finance, Accounts Receivable Factoring can be a tremendous advantage to companies who use factoring as a trade funding method to put themselves in a position to offer credit terms to international customers in export finance transactions while still receiving cash when the goods they are exporting are shipped. The offering of credit terms to customers can be a tremendous competitive advantage.
Traditional Accounts Receivable Factoring is an ideal solution for companies that need extra cash flow to purchase inventory, cover payroll, invest in marketing, or virtually any use of immediate liquidity. Companies that factor their accounts receivable create an immediate influx of cash based entirely on invoices which are already on their books. In a typical Accounts Receivable Factoring transaction, the finance provider, who is known as the factor, purchases the accounts receivables and advances 70% to 90% of the total amount to the company in 24 to 48 hours. The factor then pays the remainder of what is owed to the company once the client pays the factor for the outstanding invoices, which is usually 30 to 45 days later.
Export factoring is a very common form of accounts receivable factoring that is ideally suited for exporters. If you are an exporter, Export Factoring is the perfect trade finance vehicle for companies that are going to start offering terms to their international customers but who are not themselves in a position to wait to receive payment for the goods they are shipping. This is a very common position for exporters.
In this increasingly competitive global environment, offering terms will likely help you keep your customers and may even attract new ones exporters must o keep their customers and land new onesmake more sales waiting to get paid what they’re owedreceive monies they are owed wait for payment offering payment terms rather than lose or lose their customers than not Say your company has decided it must offer terms to your buyers in order to remain competitive and keep the customer. Obviously, buyers are much more likely to do business with them their buyers bust still have to receive cash up front when the goods are delivered. The financier acting as their factor purchases your receivables and forwards payment, usually 70% to 90%, once it has the receivables documentation. The client pays the factor, not you, once it receives the goods. The factor pays you the balance when it receives payment from the customer, less a small fee.
Construction Factoring allows you to access the cash that’s tied up in invoices you haven’t yet collected. The factor purchases your uncollected construction invoices, applies a discount factor and pays you the difference, often in less than 10 days.
The factor advances a percentage to you, then collects the invoices as they become due and forwards the remainder of the invoice to you, less a factoring fee. Few factoring firms work with the construction industry, but we have direct lines into those that do. We will help you find the financial partner that will provide the best solution for your company’s particular situation.
Spot Factoring is a type of Accounts Receivable Factoring that is particularly attractive to small business owners who don’t want to factor all of their invoices. Typically, businesses will want to spot factor when they don’t need a steady flow of cash or have varying gross margins where it does not make sense to factor. Unlike traditional factoring, where the company turns over all invoices, spot factoring is available on an as-needed or one-time basis. This flexibility comes at a premium but often makes sense if you have one client that is particularly slow or if a consistent flow of capital is not needed.
Medical Services Factoring covers the payment gap between the cash flow needs of a medical practice facing the inherent complexity of managing receivables of third-party payers, such as insurance companies, Medicare or Medicaid. Medical Services Factoring provides quick access to funds to pay bills, payroll, and buy equipment. With Medical Services Factoring, you perform a service and send the invoice to the factor. The factor then forwards a percentage of the invoice to you. After the factor collects the invoice from the debtor, you receive the remaining amount on the invoice, less the factoring fee.
Understanding Accounts Receivable Factoring
A factor is a financial intermediary that purchases receivables from a company. The factor is essentially a financier and funding source that agrees to pay the company the value of their invoices less a discount for commission and fees. The factor advances most of the invoiced amount to the company immediately, with the balance paid upon receipt of funds from the invoiced party.
Factoring helps a business to obtain immediate capital based on the future income attributed to a particular amount due on an account receivable or business invoice. Accounts receivable function as a record of the credit extended to another party where payment is still due. Factoring allows other interested parties to purchase the funds due at a discounted price in exchange for providing cash up front.
The terms and conditions set forth by a factor may vary depending on their own internal practices. Most commonly, accounts receivable factoring is performed by third-party financiers who are known as factors. Factors often release funds associated with newly purchased accounts receivable within 24 hours. Repayment terms can vary in length depending on the amount involved.
Additionally, the percentage of funds provided for the particular account receivables, referred to as the advance rate, can also vary. Accounts receivable factoring is not considered a loan because the parties don’t issue or acquire debt as part of the transaction. The funds provided to the company in exchange for the accounts receivable is also not subject to any restrictions regarding use.
Accounts Receivable Factoring Best Practices
A factor is a financial intermediary that purchases receivables from a company. A factor is essentially a funding source that agrees to pay the company the value of the invoice less a discount for commission and fees. The factor advances most of the invoiced amount to the company immediately and the balance upon receipt of funds from the invoiced party.
A factor allows a business to obtain immediate capital based on the future income attributed to a particular amount due on an account receivable or business invoice. Accounts receivable function as a record of the credit extended to another party where payment is still due. Factoring allows other interested parties to purchase the funds due at a discounted price in exchange for providing cash up front.
The terms and conditions set forth by a factor may vary depending on their own internal practices. Most commonly, factoring is performed through third party financial institutions, referred to as factors. Factors often release funds associated with newly purchased accounts receivable within 24 hours. Repayment terms can vary in length depending on the amount involved. Additionally, the percentage of funds provided for the particular account receivables, referred to as the advance rate, can also vary.
Factoring is not considered a loan because the parties don’t issue or acquire debt as part of the transaction. The funds provided to the company in exchange for the accounts receivable is also not subject to any restrictions regarding use.
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