Invoice Discounting – How it Works
Invoice discounting is a flexible and efficient process that involves selling your accounts receivable to a factoring company. The factoring company buys your outstanding receivables and issues a cash advance. Here’s how it works:
1. Invoice your clients like always
2. Send the factoring company a copy of the invoice and receive up to 90% instantly
3. Your clients send payment to the factor
4. Once payment is received, you’ll be issued the remainder of the value, minus invoice discounting fees
Invoice discounting (also known as invoice financing) is available for most industries and can boost growth and correct irregular sales patterns.
In the United States, the process of invoice discounting always refers to the collateralizing of accounts receivable with notification to the customer, although it may differ in Europe. Invoice discounting finance allows organizations to draw in as much or as little cash as needed on accounts receivable. Approval for invoice discounting is based on a credit analysis of an organization’s customers as opposed to the company’s credit.
Other forms of financing, known as “Non-Notification Factoring” or “Confidential Factoring,” are similar but include stricter terms. Non-notification factoring implies the factoring company uses a hands-off approach with collecting on invoices, while also imposing guidelines similar to banks. Factor Finders will consider “Non-Notification Factoring” in special circumstances.
Qualifying for Invoice Discounting Finance
Corporations that sell products or services to commercial accounts on credit terms can apply for factoring and invoice discounting so long as their invoices not pledged to another lender. We partner with many different types of clients:
Invoice Discounting Can Benefit Your Business
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Factoring and Invoice Discounting Available for Numerous Industries
All transportation companies benefit from quick cash flow. We help fund long haul (LTL and truck load), local delivery companies, freight brokers, air freight carriers, and hazardous hauling companies.
Technology importers, electronics, automotive parts distributors, packaging companies, and other businesses that sell to credit worthy customers can receive initial funding within 3 to 5 business days. There are no upfront fees or financials required.
Small start-up operations along with established corporations should consider gaining access to funds to grow their companies. Temp staffing establishments for professional, office services, and manufacturing industries can access fast payroll funding in 3 to 5 business days with no up-front fees
Factor Finders has the expertise to quickly collect from hospitals, nursing homes, physical therapy centers, and other facilities. We know it is difficult for medical staffing agencies to obtain bank loans and acquire enough working capital as they strive to provide feasible solutions.
Factor Finders will work with enterprises in any industry. The process takes less than one week with future payments reaching your account in 24 hours.
Healthcare providers can receive immediate cash for billing third-party vendors (such as commercial insurance companies, HMO’s, Blue Cross-Blue Shield, Medicare and Medicaid) through a process called medical receivable funding. This process differs from commercial accounts billing. Clients include:
Physical therapy centers
Government contracts often cause cash flow problems as operating capital is used to complete big contracts, but payment is agreed upon on 30 to 60 day terms. Problems arise when you receive potential contracts, but lack the working capital to fulfill them. Let factoring be your business ally by advancing you 75 to 90 percent of the value of your invoices. Our account executives specialize in government assignments and assessing the value of government contracts.
Want to know more about the ins and outs of factoring? Check out our factoring guide!