What is Accounts Receivable Factoring?
Invoice Factoring is a form of asset-based lending in which the business owner sells their accounts receivable (AKA Invoices) at a discount to a Factoring Company for immediate cash.
You can expect to receive about 80% of the value of your accounts receivable upfront. You’ll get the other 20%—minus the factor rate—once the client pays their invoice.
The factor rate (also called a discount rate) is a percentage of the invoice value, charged weekly or monthly. Factor Rate 0.5–5% per month.
Minimum Qualification Requirements:
- Must be an LLC or Corporation, no sole proprietors.
- Must sell B2B (business to business) or B2G (business to government) and sell on payment terms generating accounts receivable (waiting to be paid Net 30, Net 60 or Net
90 from their customers, for example).
- Must generate a minimum of 40K in receivables monthly.
- Must be ok with a 12-month Factoring agreement. We’re looking for a relationship (we’re able to continuously provide funding as quickly and as often as the business owners are generating sales/receivables).
What we need:
– Filled Application
– Detailed A/R and A/P aging report
– Customer list and applicable any client/customer contracts.