What is a Factoring Company?

What is an Invoice Factoring Company?

You may have heard of the concept of factoring, but might wonder, “What is a factoring company?” “What do they actually do?” “Are there different kinds?”

A factoring company is a business that purchases another company’s invoices. Basically, a factoring company offers invoice factoring (or accounts receivable factoring) services to companies of a variety of sizes.

Working with factoring companies is a popular financing solution for businesses that have cash flow issues due to slow-paying customers, seasonal highs and lows or rapid growth.

One important aspect of a factoring company to understand is that businesses don’t borrow any money from a factor. Instead, they are simply advanced their own money ahead of time since it’s their invoice.

Why Would a Business Work With a Factoring Company?

Working with a factor company provides businesses with cash quickly, usually within 24 hours. Because it is so fast and simple, B2B (business-to-business) companies find it to be a great funding solution for unsteady cash flow.

Businesses with credit issues also look to factoring as a solution.  Because your funding is based on outstanding invoices, factors look at the credit history of the businesses your company invoices, not you.  Factoring companies approve businesses more easily than a traditional bank loan, there aren’t any long-term contracts, no debt is created and the fees are low.

Find the Right Factoring Company

Start the process by completing the form and getting set up with the best factoring company for your business.