Authored by Phil Cohen
Traditional lending options can be complex and confusing. Banks ask for extensive amounts of information regarding your business and finances when applying for loans. It is also a lengthy process that can take weeks or months to complete. Invoice factoring takes away all of the confusion with a straightforward approach to cash advances.
How Factoring is Different from Traditional Loans
Factoring does not require business owners to provide the same type of information as traditional lenders. When you choose factoring, you sell your outstanding invoices to a factoring company. In return, the factor gives you a cash advance on the value of the invoice, which is typically 80-90%. The factoring company assumes the responsibility of collecting payments from your clients. After the invoices have been paid, the factor will release the remaining balance to you from the reserve account. A small factoring fee will be deducted from the balance. A bank will require you to pay interest on the entire amount of the loan until it is paid off. Since factoring is using money you have already made, interest is not charged and it is a debt-free way to have immediate cash. Factoring removes the complexity of traditional banks while still giving you quick access to funds. Where a bank would make you wait weeks for approval and payout, you will typically see factoring approval in 3-5 days and receive cash within 24 hours of approval.
Finding a Factoring Company
Just as you would research a bank for a loan, you will also need to select a factoring company. However, the process is simpler than looking for a bank thanks to factor brokers. A factor broker, such as Factor Finders, will do the hard work of finding a factor to connect with you. We have a network comprised of factors from all different industries and we will help you find the perfect match. Just as factoring is less complicated than traditional lending, we also want to make the factor-business owner connection as smooth as possible.
Contact Factor Finders
Receive access to your cash now without the complexities of traditional lending. Contact Factor Finders and we will respond within minutes. We will help you find the perfect factor for your business.