What is Invoice Factoring?

Is your business facing restricted cash flow? Invoice factoring is an alternative to traditional loans when cash flow is limited and accounts receivable sit on the balance sheet. Invoice factoring is an account receivable-cash flow management strategy that allows your business to collect on receivables held as unpaid invoices. Instead of waiting for a cash payment from customers, your business can receive immediate cash on the face value from Swift Funding Solutions.

Factor Your Invoices in 5 Easy Steps

Factoring your business’s invoices to Swift Funding Solutions is an easy process defined by five simple steps: 

  1. Send the invoice to your customer for goods or services provided 
  2. Submit the invoice to us 
  3. You receive an immediate advance for approved customers 
  4. We receive invoice payment from the customer  
  5. We release the invoice balance to you less the factoring fee

Factoring Accounts Receivable Example

Here is an example of how the accounting works for an invoice factoring transaction: 

  • $10,000 – Invoice balance owed 
  • $9,000 – Advance paid to the business (90% rate)   
  • $1,000 – Reserve held until payment (10% rate) 
  • Invoice is paid in 30 days 
  • (250) – less fee for $10,000 invoice (2.5% rate)
  • $750 – reserve forwarded to the business 
  • $9,750 – total amount received by the business on invoice   

The example will vary in real application contingent on industry, customer, and time to payment.

Invoice Factoring Strategy

Invoice factoring is both a solution and a strategy that can help in several ways depending upon your unique business needs. Immediate payment for outstanding invoices gives your business the flexibility to pay your bills, meet payroll, or invest in business growth opportunities. This is a strategy that many Fortune 500 companies have used to grow while increasing profitability. 

Invoice factoring is a solution when challenging economics tighten loan and line of credit terms. Factoring is an option when banks say no because it is not based on customers’ creditworthiness. New companies often choose invoice factoring because they qualify without the restriction of strong financials. 

This is just the beginning of how invoice factoring can be right for you. Read more about the Benefits of Factoring and Frequently Asked Questions.

Getting Started

You are welcome to contact us immediately if you are interested in exploring flexible cash flow solutions with invoice factoring on accounts receivable. We will schedule a time to discuss your business’s cash needs and strategic objectives to verify if invoice factoring is right for you. We will answer any questions and provide an application.

Have Questions? Get Answers.

You might be cash-strapped and interested yet the questions are mounting if invoice factoring is right for your business. Please read our Frequently Asked Questions.

Is Invoice Factoring Right For My Business?

Invoice factoring is an excellent strategy for many businesses across a variety of sectors. Collecting invoice payments is not only a labor-intensive process but it can strangle a business of the cash it needs now. If you want to dedicate fewer resources toward debt collection and access cash on those invoices immediately, invoice factoring can help your business.