Invoice Factoring

Invoice factoring, also referred to as selling invoices, or selling accounts receivables, refers to a process where companies offer open invoices for sale to an invoice factoring company.

The account receivable finance company, or factor, assigns a value to the invoice portfolio based on the ability it has to collect, the industry they serve, the credit reputation of the debtors, and the total amount due before offering a factoring and advance rate for the invoices. If the valuation is deemed fair by the company selling the invoices, the transaction is closed. By selling invoices, companies can focus on their main tasks: creating more products and finding new customers, rather than dealing with the frustration of chasing down money from sales that have already been made. So if your business has invoices that are not only weighing down your balance sheet, but are costing you time, money and effort to try and collect, consider selling these invoices to an experienced accounts receivable finance company.

One of the most important things businesses need in order to keep the business cycle going is cash. When businesses choose to offer goods and services on credit in order to entice new customers to make purchases, they often find themselves in a cash flow pinch. Invoice factoring for business cash flow needs is a great way to keep the business cycle going by providing the necessary cash to be able to fulfill orders without adding debt to the balance sheet.