What is a factoring line of credit?
A factoring line of credit is a line of credit facility with an accounts receivable factoring company that is based on outstanding invoices that will increase and decrease with your outstanding accounts receivable.
If you have an arrangement with a factoring company where they will advance 90% on outstanding accounts receivable, then your credit line would typically be 90% of your eligible outstanding accounts receivable or invoices. You use this line of credit or factoring line by requesting to factor invoices that you have outstanding, and then the factoring company will advance the amount of funds you need in a matter of hours.
How do I qualify for a factoring line of credit?
To qualify for a factoring line of credit there is an application you will fill out. This will give the invoice factoring company an idea about the overall health of your company and the credit worthiness of your customers.
Factoring companies main concerns when providing a factoring line of credit to a client are:
Factoring companies main concerns are not how many years a company has been in business or what a business owners credit score is. The main concern is that the invoice factoring company is buying invoices that will get paid.
If you would like to apply with Meritus Capital go here -> Meritus Capital Application
What does accounts receivable factoring cost?
There are a number of different factors that will determine factoring costs for your business. One is how long it takes for your customers to pay. But, typically factoring costs starts at less than 1% and can go up to 4% or so if your clients take a long time to pay.
If you have any questions or would like to find out more about factoring lines of credit, please do give us a call at 1-877-648-3709.