Invoice Factoring Company

What is Accounts Receivable Financing or Factoring?

Accounts Receivable Factoring, also known as invoice financing, is a financing method where a business receives immediate cash by selling its outstanding invoices or receivables to a third-party financial company called a factor. Here's how it works:
1. Advance Payment: The factor advances a percentage of the invoice value to the business, typically between 70% to 98%. This advance depends on the industry and the agreement terms.
2. Collection: The factor receives payments directly from the buyers who owe on the invoices.
3. Final Payment: Once the factor collects the full payment from the buyers, it returns the remaining balance (if any) to the business, minus its fees or discount. Some industries have evolved to a full advance with no reserves. For example, trucking clients often receive a full advance with no reserves, meaning they get the entire invoice value upfront minus the factor's fees.
Benefits of Accounts Receivable Factoring
Immediate Cash Flow: Businesses receive cash immediately rather than waiting for customers to pay.
Improved Cash Flow Management: Helps businesses manage cash flow better, ensuring they can pay their bills and daily obligations on time.
Reinvestment: Provides funds that can be reinvested into business operations for growth and expansion.
Flexibility: Useful for businesses with long payment terms or slow-paying customers and allows to onboard new customer sold on credit terms.
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Ideal Use Cases
Businesses with Long Payment Terms: Companies that offer extended payment terms to their customers and need cash before those payments are received.
Businesses with Slow-Paying Customers: Companies that experience delays in payments from their customers.
Growth-Oriented Businesses: Companies that need immediate cash to reinvest in their operations and fuel growth.

Overall, accounts receivable factoring is a viable financing option for businesses needing quick access to cash without waiting for customer payments. Nationwide Commercial Credit offers Non-Recourse Factoring for eligible buyers that reduce the risk for both the client and Nationwide Commercial Credit.