Accounts receivable factoring allows your company to finance its accounts receivable. It provides immediate cash flow and helps ensure you have the funds to pay company expenses.
This solution is available to small and midsize companies that work with commercial or government clients. It has simple qualification criteria and can be deployed quickly.
Commercial Capital offers competitive receivables factoring rates, high advances, and competitive terms. For an instant quote, fill out this form. To speak with an expert, call us toll-free at (877) 300 3258. Services are available in the USA and Canada.
Note: Companies that invoice over $200,000/month should also consider sales ledger financing, a customized receivables financing program for larger companies.
Here is the bottom line of what we offer:
- Low rates: As low as 1.15% per 30 days (qualifying clients)
- Pro-ration: Rates can be pro-rated for shorter/longer periods
- High advances: As high as 95% based on industry
- Short terms: Contract length is adapted to your needs
- Flexible lines: Based on your needs and projected growth
- Easy qualification: Simple requirements and easy paperwork
- Quick setup time: Usually a few days
- Quick funding: When possible, invoices funded the same day
How does receivables factoring work?
Accounts receivable factoring programs usually finance your invoices in two installments. Some industries, such as transportation, qualify for single-installment financing.
The first installment is advanced to your account shortly after you submit an invoice for processing. This installment ranges from 85% to 95% of the invoice. The size of this advance depends on your industry and client profile.
The transaction settles once your customer pays the invoice on their usual schedule. This second installment covers the remaining 5% to 15%, less the factoring fee. Accounts receivable factoring can be used regularly to ensure you always have funds to meet expenses.
To learn more, read “How do Factoring Companies Buy Accounts Receivable?”
The cost of receivables factoring is determined by the size of your expected financing line, the credit quality of your invoices, and your industry. Factoring costs average from 1.15% to 3% per 30 days.
Rates can be pro-rated to cover shorter or longer payment periods. For an instant quote, fill out this form. To speak with an expert, call us toll-free at (877) 300 3258.
High initial advances
A high advance is as important as a competitive factoring rate. We provide high advances based on your industry, the credit profile of your clients, and your needs. On average, advances range from 80% to 95%.
Financing your receivables offers several benefits to your company. These include the following:
- Improves cash flow quickly
- The line grows with your business
- Lets you offer payment terms with confidence
- Easy to obtain
- Can be deployed in days
Will factoring help you?
Accounts receivable financing is designed to help companies whose main challenge is that their receivables don’t pay fast enough. Factoring usually helps you if you:
- Have cash flow problems due to slow-paying invoices
- Work with commercial or government clients
- Have clients have good credit
- Have decent profit margins
Qualifying is easy
Accounts receivable factoring is designed with small companies in mind and has simple qualification requirements. The main requirement is that you do business with creditworthy customers. Other qualification requirements include the following:
- Receivables must be free of liens
- Company must be relatively free of tax/legal problems
- Company owners must have industry experience
How to choose a factoring company?
Choosing the right factoring company is essential to the success of your business. You must work with a factor that is a good match for you and can help you reach your objectives.
Here are some criteria to look for:
1. What industries do they work with?
Every factoring company claims to be a generalist that can work with any company. In reality, most factoring companies have industry specialties. You get better service from a factor that has experience in your industry. They should know your clients, their nuances, and industry trends.
2. Can they provide references?
Most factoring companies will provide you with references if you ask. If possible, ask them to provide references from companies that are similar to yours.
Note that the time to ask for references is at the time of receiving a proposal.
3. Can you test drive their product?
Some factoring companies allow you to test drive their product (we do this – read here). This step helps you determine if they are the right choice for you. It also allows you to see how they treat clients first-hand. This insight is essential, especially if you are looking for a lasting relationship.
4. How long have they been in business?
The factoring industry has had a lot of new entrants in recent years. Many are great companies. However, new companies haven’t had enough time to build a track record.
Industry longevity is essential because you want a factoring company with experience during good and bad times. This staying power lets you know that the company is well-managed. Ideally, you want to work with a company that has survived a recession.
5. Are their advances and rates competitive?
You want to work with a company that offers competitive advances and rates. Fortunately, the industry is competitive enough that most offers will be close to each other. However, comparing a couple of factoring proposals is a good idea.
6. How are they funded?
Knowing how the factoring company is funded is important, as it gives you an idea of its strength. Most companies are funded through equity (from the owners) and a line of credit from a bank. Others are funded through the family office of wealthy individuals or venture funding. Others use re-factoring agreements in which another factoring company provides the actual funding.
For more information, read “How to Choose a Factoring Company.”
Need more information?
Are you evaluating accounts receivable factoring companies? We want to help you make an educated decision. We have additional information in our financing learning center. Popular articles include: