Invoice factoring: What Is It?
With invoice factoring, your company can obtain working capital in exchange for your outstanding bills in as short as one business day. This non-loan type of funding is known as “accounts receivable financing.” Your lender, which is us, will buy the outstanding bills from your company at a reduced rate and give you a cash advance for the net amount, which is usually between 70 and 90 percent of the invoice value up to $100,000 per common ownership. We can set up bulk online invoice factoring for individual or small invoice bundles, or for your complete sales ledger.
We are in charge of collecting on the invoice when using Main Street Finance Group’s online invoice factoring service. We’ll send you the balance of the invoice (less our charge) as soon as your client pays; periods are normally between 30 and 90 days. You can rely on us to collect on your invoice in a professional manner since we understand how essential your customer relationships are.
Rates for Factoring Invoices
The cost of online invoice factoring depends on a number of variables, including time to payment, your company's and your client's financial histories, and the gap between the invoice's worth and our purchasing price. Fees usually amount to one to five percent of the total invoice amount for each thirty days that the invoice is not paid.
Who Can Apply Online for Factoring Invoices?
Factoring invoices is best used for:
- Companies with protracted periods of unpaid invoices
- Companies having a high volume of unpaid invoices
- Closing the gaps between invoice submission and payment receipt
- invoices that are at least $15,000 in value, have extended credit terms, and are not past due by more than 90 days
- Companies looking for quick funding
- B2C companies with less capital requirements
- Companies without collateral, like real estate or other significant assets, or with lower credit scores
Construction firms, pharmacies, legal offices, manufacturers, business services, and more can all profit from invoice factoring. Regardless of the sector you work in, our knowledgeable finance Advisors will collaborate closely with you to determine the optimum finance solution that will enable you to meet your objectives without compromising cash flow.
How to Get Invoice Factoring
Utilize
Collect three months' worth of bank statements and other documentation. Give us secure access to the transactional data from your bank account so we can approve it more quickly.
Select Funding
Within an hour (during regular business hours), a financing advisor will get in touch with you to finish your application and go over your funding alternatives.
Obtain Money
Within a day of deciding whatever funding option is best for your company, you and your funding advisor can authorize and deposit your funds.
Decide on Repayment
Your company's debit and credit card sales on a daily or weekly basis will be automatically subtracted to cover payment. The amount of your payment will depend on your sales.
How Factoring Invoices Is Used
The funding obtained through invoice factoring is not subject to any limitations. The best uses for funds obtained through online invoice factoring are usually as follows:
- Close cash flow gaps without taking out a long-term loan.
- Payroll, rent, utilities, and other regular costs should be covered while you wait for
- customers to settle their bills in full.
- Finance expansion plans, new machinery, and other expensive yet very profitable investments.
- Profit from seasonal business possibilities by making bulk purchases of merchandise.
Criteria for Qualification in Invoice Factoring
Online invoice factoring has more flexible qualifying standards than conventional forms of borrowing because your invoices basically serve as collateral.
Main Street Finance Group is concerned with your company’s total health, not simply your credit score, and your clients’ payment histories.
Here are some things we take into account:
- Revenue for businesses
- Cash flow
- Payment history of the vendor
- Years of operation
- Records accessible to the public
First place on invoice factoring is not necessary, and no further collateral is needed.
Q&A on Invoice Factoring
We examine the client you sent an invoice to confirm that they meet the requirements to pay the amount due. We purchase all of your company’s outstanding invoices for that customer after they are accepted and the relationship is established, until either of us decides to break up with them.
We do not require first position on invoice factoring. However, most lenders do.
We give your customer the payment information to wire to our business bank account, and will test beforehand to ensure payment is received properly. We are not a collections agency—we know how important your customer relationships are, and you can trust us to collect on your invoice professionally.
No, invoice factoring is technically not a loan. Online invoice factoring is a form of asset purchase known as “accounts receivable financing”. There are multiple types of invoice factoring available, including invoice financing and invoice discounting. Learn more about how online invoice factoring works.
No, there are no interest payments with invoice factoring. Our fees are based on the difference between the value of the invoice and our purchase price, and will be clearly explained to you by one of our Funding Advisors.