If you have begun the invoice factoring process, you have undoubtedly already been asked to submit an accounts receivable aging as part of your factoring paperwork. While an aging is one of the most standard documents to request during due diligence, we still want to help you fully understand how beneficial the aging can be to your factor – and to your chances of being approved for funding.
The accounts receivable aging (or invoice aging) shows all of your current outstanding accounts and how long the invoices have been open. A factor will study the aging to understand how and when your customers pay – do they pay invoices in full or in installments? Do they pay in ten days or extend their payments to 90 days?
In addition to credit checks on your customers, this is the best way for your factoring company to determine whether purchasing each account is a sound business decision. Accounts that are paid in full within the factor’s stated recourse period are a good investment and will likely be approved, while accounts that feature several short pays or a very long aging may only qualify for a limited credit line if they qualify at all.
As with every document your factor sends or requests, a current aging helps them provide you with the best service and ultimately can save you money. For example, while you may still end up waiting for payment from a customer that your factor turns down, you will avoid paying extensive fees on that money and the potential of purchasing it back from the factor.
Factor Finders’ invoice factoring partners can walk you through the due diligence process and make sure you are fully informed of your rights and options at every step. Contact us today to find an invoice factoring expert in your industry and receive a same-day proposal.