Advance rate is the percentage of the invoice value that the factoring company will advance to your business. For example, if the advance rate is 80%, and the invoice value is $100, the we will advance $80 to the you.
Discount rate is the % fee charged by the factoring company. It is deducted from the advance when the invoice is purchased. If the invoice value is $100, advance is 90%, and the discount rate is 3%, your business will receive $87 today and $10 when the bill is collected.
Credit protection may take the form of a guarantee by the factoring company to pay the business the full invoice value if the customer does not pay, or it may involve the factoring company taking steps to collect payment from the customer on behalf of the business.
Invoice dollar amount, e.g. $20,000 per month, that your business must sell to the factoring company to be eligible for the services. If the minimum is not met you will charged a fixed fee, which will be stated in your agreement.
Process of evaluating the creditworthiness of your customers. Credit analysis helps the factoring company determine the risk of non-payment by the customer and may be used to set the advance rate and discount rate for the invoice.
Payment speed can differ depending on the payment method chosen by the customer. Wire payment is instant but usually comes with a fee about $30, whereas ACH transfer may take 1-2 business days but generally comes free of charge.
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