A Factoring Loan Is Not Really A Loan

Factoring Loan

A Factoring Loan is not really a loan at all. Factoring your outstanding invoices is a way to improve your cash flow without impacting your balance sheet or bank obligations.

When factoring your outstanding invoices, you get paid cash within 24 - 48 hours instead of when your customer gets around to paying you. To do this, your factoring company buys your accounts receivable invoices from you at a discount. For example, if you have $10,000 worth of outstanding receivables from low risk, reputable companies, then they would pay you something like $9,000 immediately and they get paid whenever your customer pays the invoice.

Even though the invoice discount might seem steep, you need to take into account the fact that you get your cash now instead of trying to get a bank loan within 48 hours or alienating your vendors and employees by not paying them in a timely fashion.v

The amount of discount is determined by many factors. These factors take into account the risk associated with the invoices you are asking to be factored. The risk is determined by the paying quality of the customers who owe your bills and the total dollar amount you need to factor.

To find out how much you qualify to have factored, take the time to fill out a brief online factoring form.

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  • Article Updated
    Aug 02, 2022
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  • What Our Customers Say

    I first considered AR Factoring when our business ran into a cash flow snag. Payroll was due in just 3 days and all of a sudden our largest customer adopted a "new policy" to pay our invoices no sooner than 54 days after they had been billed. And that was compounded by the fact that we had already paid our staff for the previous 30 days they had been working in order to meet the "deliverable" we had agreed to!

    Roger H.

    Ours was a small service business with about 20 employees. It sure was a relief to pay employees and vendors promptly - even while we were getting poor treatment from our big customers - invoice factoring was a great solution for us.

    Samantha A.

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