Factoring Accounts Receivable 101
Factoring accounts receivable, or invoice factoring, is a process used by companies to secure immediate cash for sales they have made to their customers. Their customers have, yet, to make their final payment. Quite often, a business sells their products or services and gives their customers 45, 60, or 90 days to pay in full. These credit terms benefit customers who have bought and received such terms. However, they can be a source of cash flow problems for the company that makes the sale. This is especially true if the selling company is new or growing.
However, companies may want or need additional cash for various reasons. Perhaps a new piece of equipment will help improve profits, but additional cash is needed to make the purchase. Perhaps more employees are needed to meet demands, but more cash is needed to make payroll payments. Taking out a bank loan is not the only nor best way to get cash. Factoring accounts receivable is another, and oftentimes better, way to do it. Check out "Benefits Of Factoring Accounts Receivable" for more information.
Here's How Factoring Accounts Receivable Works:
A company makes business-to-business sales and provides its customers 30, 60, or 90 days to pay their invoices. Suddenly, the company's cash reserves are low -- they need more cash. They search for a third party to purchase their unpaid accounts receivable. This third party buys those receivables (invoices) and issues the company an immediate cash advance for a portion of the dollar value of the receivables. The third party maintains the balance of the receivables and collects all payments. When they are made, the third party provides the company the balance of the receivables, less a small factoring fee. In this example, the third party is called a factoring company.
Caps Funding, LLC is a factoring company. It is that third party. This is what I have done for more than 20 years!
Follow These 5 Simple Steps To Factoring Accounts Receivable
Step 1
Invoice Customers For Goods Sold or Services Rendered
Step 2
Submit Unpaid Accounts Receivable to Caps Funding
Step 3
Caps Funding Provides a Cash Advance on Approved Receivables
Step 4
Caps Funding Collects Payment Directly From Your Customers
Step 5
Caps Funding Rebates Remaining Balance, Less the Factoring Fee
Before any money exchanges hands, Caps Funding will describe all details in a written agreement. These details include the amount of cash to be advanced, the reserve balance, and the factoring fee.
Advantages of Factoring Versus Securing a Loan
A factoring agreement can be arranged and completed in as little as 48 hours. There are NO application fees, loan origination fees, points to pay, assets to disclose, credit checks, or debt to divulge on the balance sheet. Even a history of strong financial performance is not necessary. Factoring accounts receivable is quick and simple!
Getting Started with Caps Funding to Factor Accounts Receivable
Call (803) 429-3686 to speak with me, Charles, about how we can work together to get you the cash you need immediately!