Online factoring companies: what you should know about them?

Do you wait for the payment from your clients for about 30 days or 60 days or even 90 days? Do these long payment gaps create serious cash flow problems for your business, to carry out important expenses? How do you plan to pay for the new inventory and disburse salaries to your employees? If these questions are troubling you, this is the time to avail services of the factoring companies

Factoring companies are also called as Invoice factoring companies, accounts receivable factoring companies, invoice financing companies, etc. 

Best invoice factoring companies offer a financing option that allows the small, medium, and large business owners to get immediate cash in return of the sale of their account receivables. So, the advantage for the business owner is that rather than waiting for many weeks and months, they get payments for their invoices enabling them to use this money to run their daily expenses and to grow their business too.  

Factoring companies are evolving with the changing times and are becoming digital. Making their business online is their primary goal making the application process quicker and easier. There are many online factoring companies that allow the businesses to sell their invoices or accounts receivables at a discount to the factoring finance company. On receiving the invoices, the factoring companies advance 85% to 90% of the amount upfront. The remaining amount of balance is given after receiving the payment from the client minus their own charges.

In an online factoring, businesses can apply online. Once the application is received, the same is validated immediately. Then follows the discussion on various parameters including their financial requirement etc. When the online factoring company approves the requirement of the business by sending a proper proposal, mentioning their terms and conditions along with the rates they will be charging, the entire process gets initiated.

It also entails a thorough and detailed background check of the business and its clients. More attention is paid to the client’s paying ability and history rather than on the company’s credit check. It might take 3 days to a week to complete this process, and then the funding generation begins. The invoices are received, authenticated, and the funds are released within a day. Some supporting documents may also be requested by the factoring company. The mode of payment of the funds is decided by the mutual agreement of both parties.

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