How to use invoice factoringPosted by Fletcher Sosa on January 25th, 2021 Invoice factoring has become a popular cash flow solution. Many businesses are now choosing to use factoring services as a way of freeing up cash which is tied to invoices in order to increase cash flow. Factoring is a form of finance in which businesses use their unpaid invoices as collateral for cash advances. It provides businesses with instant access to cash flow to be used as working capital. Factoring is done invoice by invoice, which means no actual debt or loan is created. How does it work? You deliver goods to your clients and send your invoice. You transfer your receivables to the factoring solutions company. The factoring company pays an immediate advance of up to 85% of the invoice amount. The factoring company collects the money straight from the client so that you do not have to. Once payment is received from your client, the balance of the invoice is paid into your account. Invoice factoring is ideal for small or startup businesses with cash flow problems as it converts debtors into cash. By freeing up working capital invoice factoring provides the business with the cash it needs in order to continue growing.Like it? Share it! |