Important Tips For Invoice Factoring & Your Business
If you have decided that invoice factoring is right for your business, you can begin the application process by reviewing the tips for a smooth factoring application.
Discuss Options First
The application process begins with a discussion before the application is submitted. You will discuss options with a factoring specialist with available options contingent upon factors, such as the business’s financial history, accounts receivable characteristics, and current cash needs.
Starting the application process begins with providing basic information about your business including company name, contact information, business type/industry, and customer information.
The business industry and customer type are leading variables in approving the application and receiving a quote. Most important to the application is that the invoices are owed by a business and not individuals.
Other factors are considered for a full invoice profile and involve the balance of invoices and the debtors’ business type. You will fill out the application and provide supporting documents for a quote and approval.
Getting approved involves a review of some basic information about the business including:
- # of current customers on credit terms
- Average monthly revenue
- Amount held in outstanding invoices
- Liens or judgments against your business
- Accounts Receivable aging report
The accounts receivable aging report details how invoices are graduating over time. This is an important detail to the application because it shows the nature of the debt, how it ages, and how long it takes customers to pay invoices. Reliable customers that pay quickly are more attractive than others that wait.
Be Complete on the Application & Documentation
It is important to be complete and offer thorough details to avoid delays with back and forth phone calls for clarification. The application requires supporting documents including the business’s bank statements, current invoice copies, articles of incorporation, and the receivable aging report. The final approval then goes to underwriting.
We review your application and supporting documents to determine your rate. Significant attention is given to debtors’ creditworthiness because the business does not receive a credit check. Each customer will be evaluated and given credit limits. We will search public records to verify clear title to accounts receivable. Underwriting due diligence typically takes 5-10 business days for new accounts. Customers can then receive funds in as little as 24 hours.
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.