Why sell your outstanding invoices or accounts receivable?
Businesses all have different pain points in running their business, different stresses and different needs. Here are ten very common reasons why companies sell their invoices.
- Businesses require consistent cash flow.
- Companies want credit protection.
- Employers want to have regular ongoing payroll funded.
- They want to import or buy more inventory.
- They want to fulfill a large purchase order.
- Quick growth is happening or expected and they're going to need funding quickly.
- Business owners don't want to give up equity in their company.
- Closing and funding can happen very rapidly, sometimes in less than two days.
- It's a start-up company with no history in the banking world.
- They're seasonal business and they need to smooth out their revenue cycle.
How to sell your invoices, the process and getting set up with a factor.
Here is a step-by-step breakdown of how the sale of an invoice process works once you are setup with a factoring company:
Step 1: The seller of the invoice gets 80% to 95% of the amount of the factored invoices within 2 to 24 hours of selling the invoices. For example, if you sell $500,000 worth of accounts receivables and get an 90% advance, you will receive $450,000.
Step 2:The invoice factoring company keeps the remaining 10% or $50,000 as security until the receivables or payment from the invoices has been received.
Step 3:The factoring company collects the receivables or collets on the outstanding invoices over a 30 to 90 day period generally.
Step 4:Once the payment has been received, the factor pays you, (the seller of the invoices), the total amount collected less the factoring fee, which typically runs 1% to 3% of the total payments. The quality of the receivables and the length of time it takes the sellers client to pay determine the cost of the factoring fee. For example, reliable payers who pay within 30 days may only incur a 1% fee or even less, while slow paying customers who take more than 60 days may be assessed a 2% or 3% fee.
The factor fees are all determined ahead of time and agreed upon when getting set up with the factoring company so you as the seller will be able to determine what your cost will be depending on how long your different clients take to pay.
This process happens very seamlessly and takes very little effort on the part of the seller of invoices apart from uploading or emailing over the invoices they would like factored.
Getting set up.
Here are the basic 4 steps.
- Quickly Sign Up - Just provide your full name, email and create a password.
- Apply and Submit Info - Fill out and upload some basic information about your business.
- Get Back to Work - Get back to doing your job while we get everything set up for you.
- Accept and Submit For Funding - Sign our contract and upload invoices for verification and funding.
Contact us today and find out more about why and how you can sell your invoices!