What is a factoring company?

Margie D. Moore
How to Choose the Right Invoice Factoring Company | BlueVine

A factoring company is a business that deals with another companies invoices. They provide a perfect financial solution for your business that manages your companies cash flow problems. They maintain all-seasons highs and lows for your rapid growth and also maintain a systematic balance of your invoices to be ahead of time. The factoring company specializes in helping businesses that have slow-paying customers and looking for an instant boost of cash flow to keep their business running. They achieve this miracle by helping businesses by purchasing outstanding invoices, who collect directly from the business’s customers.

These companies are a mode of financial transactions and a type of debtor finance in which a business sells its accounting details, receipts, as a receivable third party. These companies are also called account receivable financing company provides financial options to businesses which are referred to as factoring accounts or invoice factoring. These companies have proved to be excellent alternatives to banks and can work with businesses of all sizes, varieties, and even in all stages of their business. They help out and work for every company be it a startup or a well-established company irrespective of the number of clients they hold or what is their return of interest. 

Factoring companies serve almost every industry, for instance:

  • Staffing Industry
  • Distribution Industry
  • Manufacturing Industry
  • Consulting services
  • Medical and healthcare companies
  • Food and Beverages industry
  • Textile and Apparel Industry
  • Oil and Gas Industry
  • And many more

How do even these factoring companies help various businesses? 

These factoring companies present in the market purchase unpaid accounts receivables from different businesses. And this benefits businesses in many ways:

  1. Improves the company’s cash flow: This is achieved by allowing the businesses to get paid quickly and consistently.
  2. Eliminates the waiting period of getting paid: Usually, we have thirty to sixty plus days payment terms associated with a payment schedule of a customer but involving factoring companies reduces or say almost eliminates these wait days by charging a small fee generally from half a percent to one and a half a percent on the invoice value to make sure that the due payment is done as earlier as possible. 
  3. Eventually, the factoring company helps you grow your business: so, as your business starts getting paid quickly, these accounts receivable financing companies often provide additional services to boost your business with little to no additional costs. The services offered are timely credit checks on customers to ensure they are credit-worthy. This leaves you to just focus on the ways for growing your business without any additional burden.
  4. These factoring companies have twenty-four hours after raising the invoicing policy: They provide services allowing you to release the money from your invoices usually after 24 hours of them being raised. Therefore bridging the gap between getting payment from customers and an invoice being raised. 

So, the factoring company has proved to be an excellent solution for the businesses struggling with their cash flow due to slow-paying customers. They understand you and your business to provide you with the required space to focus on your brand’s growth and future goals.

Next Post

Back Bay Apartment Rental Market Report

Back Bay is one of the most expensive neighborhoods in Boston to rent an apartment.  The pandemic proved to have a more negative impact on these neighborhoods in terms of rent prices.Boston has seen an overall drop of -2.61% in average rent prices YOY, but in Back Bay the average […]