Invoice Factoring: A Underutilized Business Credit Facility Not Commonly Known
What is Invoice Factoring? It is the sale of a company\'s accounts receivable (invoices) to a funding source, at a discount off the face value, in return for immediate cash. The funding source is known as a Factor. The process typically works like this: Your company delivers a product or service and issues an invoice to your customer. If you offer terms to your customers, without factoring, you would wait 30, 60, or 90+ days for payment. With factoring, the factor immediately purchases the invoice and advances an initial payment of 70-95 percent of the invoiced amount. In most cases, the business owner will have funds advanced within 24 hours.