Factoring is quickly becoming a popular way to finance a business in Canada. Factoring helps companies that have cash flow problems because of clients taking up to 60 days to pay invoices.
This solution improves your cash flow and provides you with funds to pay corporate expenses. It enables you to take on new clients without having to worry about their payment terms.
How does factoring work?
Factoring works by financing your invoices from customers who pay in 30 to 90 days. Instead of waiting for their payment, you finance the invoice and get immediate working capital.
Invoices are usually financed in two installments. The first installment is deposited to your account as soon as you submit the invoice to your client. This installment covers 80% to 90% (the amount depends on the industry) of the invoice.
The remaining 10% to 20%, less our fee, is rebated to your company as soon as the client pays their invoice on their usual schedule. Note that your client is not required to pay any sooner.
You can find more detailed information here.
Factoring works in many industries
Factoring can be used in any industry in which a company provides a service or product to another company. Factoring is common in many industries, including business services, consulting, staffing, transportation, oilfield services, manufacturing, and others.
Can my invoices be factored?
We can usually finance invoices from companies that meet the following requirements:
- Their clients have good commercial credit
- Invoices are payable in net 30 – 60 day terms
- Invoices are not subject to liens, tax problems, or legal issues
Will factoring help my company?
Factoring can usually help you if:
- You sell products and services to commercial clients
- Your clients pay in 30 to 90 days
- Slow payments are creating cash flow problems
Easy to get
Qualifying for invoice factoring is much easier than qualifying for other types of business financing. Factoring can be used by companies of every size, as long as they work with good-paying clients.
Furthermore, you can get a factoring line in days, rather than weeks. This quick setup makes factoring ideal for companies that are growing quickly and need help immediately.