Wednesday, 16 December 2015

Brief Guide on Invoice Factoring for Your Business

The process of invoice factoring is the sale of the accounts receivables of your business to the 3rd parties at a low price. The buyers get the rights to receive the payments for those invoices. The factoring companies pay you 80-85% of the total invoice value. The rest of the balance, by deducting the factoring charges is paid after the factoring company receive the money from the customers. This process helps the business to get the payments within a short period of time, without waiting for 2-3 months. The businesses no do not have to wait for the bank loans issues. They will be receiving the amount quickly.

The invoice factoring is applied for business entities regardless of the size. If you have an establishment in the US, you hire an invoice factoring company. It pays cash for invoices that you sent. But if, you are still confused that whether the invoice factoring will suit your business or not, maybe it is the perfect time to look through this.

Is Factoring Invoices Right for Your Company?

One of the most important situations for factoring is that you are having a small management team in your company. Factoring will help the employees to concentrate in their own work. On the other hand, factoring will take all the responsibilities of the payments from the customers. The small business sectors can easily manage the sales and payments with their sales ledgers.

If Your Cash Flow is Enough for Factoring;

Most of the companies think that they will not meet the requirements for invoice factoring. But you will be surprised to hear that all the requirements are possible to meet. The main thing that you surely should have is that you should raise the invoices regularly. There is seriously no necessary of the large monthly turnover. You should send the invoices to the factoring company for past payments.

What Should be Done?

You should require sending the invoices to the customers. You have to provide the Factor the legal sanction that you are selling your invoices to the factoring company. The legal assignment should be sent with the invoices by applying the stickers on the invoices. The customers should have the knowledge that you are using the Factor. You then sent all the copies to the Factor. It pays 80-85% of the payment to you. The factor will be helping you to run the ledger and also collect the payments. The Factor will then pay the rest of the invoice keeping the factoring charges with it.

Invoice factoring offers of advantages. It is one of the fast processes to get the payments of the invoices within 2-3 working days. The initial step takes about 5-10days because of the receipt of factoring application and checking of supporting documents. This process also helps in flowing of cash without debt. It also helps in relieving you from stress and tension of the payments. There are even no long-term terms. You can surely hire the factoring to pay cash for invoices within a short period of time.

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