What is Invoice Factoring?
Invoice factoring is a form of small business funding where a business sells its invoices to a factoring company in exchange for up-front funding. This allows you to receive the working capital you need to maintain operations and plan for the future, but without taking on the periodic fixed payments associated with a term loan. If slow-paying clients are stalling your cash flow, invoice factoring can help you by liquidating your outstanding accounts receivables to keep your business running.
Rather than waiting 30 to 120 days for your customers to pay you the money you need to run your business, invoice factoring provides you with funds within 24 to 48 hours.
Secure Financing For Your Business
After submitting your invoices to the lender for invoice financing, you’ll receive the amount of the invoice minus a percentage as payment. Once the client pays you, you satisfy the agreement with the lender. While it may be helpful to have the lender collect unpaid invoices on your behalf, understand that you will have less control over the collections process and that your clients may become aware of your cash flow shortages.
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Invoice Factoring Details
Advantages
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Invoice factoring provides a safe, immediate source of cash flow by releasing working capital that is tied up in unpaid invoices.
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Having a lender collect invoices for you can help you save time spent on administration and chasing late payments.
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Factoring provides flexibility as amounts can expand and contract with your sales volume.
Disadvantages
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Invoice factoring companies will verify your invoices with clients to ensure that they are accurate. Including a third party can affect customer relationships and also means that you will have to give up some control.
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If your client has a weak payment history or credit score, it may affect your approval.
Will your business qualify?
Approval for invoice factoring from Mahomes Capital Funding isn’t based on your monthly revenue alone. We focus on the overall health of your business. Here are some factors we consider:
Which documentation is required?
We at Mahomes Capital Funding want to make the funding process as simple as possible for you. Therefore, minimal documentation is needed for your application
550+ credit score
12+ months in business
$10,000+ average monthly bank deposits
Signed one page funding application
3-5 most recent months company bank statements
The outstanding invoices you wish to redeem
