How Factoring Works
Once you are set up with a factoring company, you can start selling your invoices at a discounted rate to them on approved customers. They will advance you a percentage (normally 75%-95%) of the receivable (invoice) within 24 hours upon receipt of your invoices and proof of service rendered and/or product received. In some case’s a verification might be necessary before funding. From there, they will handle the billing to your customer, and the collection of the receivable directly from your customer. Some factors will take their fees directly off the purchase of the invoice, where other wait until they get payment from your customer to take their fee.
Factoring Rates will vary, see our Rates & Services page for more details.
You Submit Invoice for Funding
We Fund You on Your Invoice
We Bill Out Your Invoice
Customer Pays Invoice
Hidden Fees
Watch for Hidden Fees One of the most important things to be aware of when signing a contract with a factoring company is their fee structure. Often times, factors will lure uninformed businesses into agreements with a low teaser rate.
However, the factor adds hidden fees into the contract, including:
· Administration Fee
· Interest Rate
· Same Day Funding Charge
· Credit Report Charges
· Per Invoice Fee
· Non-Factored Fees
Before you enter into a contract with a factoring company, it’s wise to question any and all fees associated with the agreement, you don’t want to be subject to any hidden fees. While the initial pricing/quote may seem lower, you could end up paying more in the long run due to undisclosed fees or charges hidden in the fine print. As with most deals, if it sounds too good to be true, then it probably is. This is one industry, where you get what you pay for.