Factoring Blog - Common Questions articles

How Do Factoring Rebate Rates Work?

Most invoice financing transactions have two components, the advance and the rebate. The advance rate is provided to your company as soon as the invoice is financed, and can range from 70% to 95% of the receivable. The rebate is basically the amount that was not advanced, less any fees or reserves. For example, if […]

How Do Factoring Advance Rates Work?

Most factoring transactions are structured by financing the invoice using two installments – the advance and the rebate. The advance is the installment that is wired to your account as soon as the factoring company receives the invoice that you want to finance. Depending on your transaction, the advance may range between 70% of the […]

What is a factoring company?

The quick definition. A factoring company specializes in financing small and medium sized businesses that have cash flow problems because their customers are paying their invoices in 30 to 60 days. Offering credit terms is difficult Although customers are paying their invoices within the guidelines of their contracts, many small businesses cannot afford to wait […]

Common Issues With Factoring Your Invoices

Most invoice factoring transactions tend to be very hands on, and therefore demand that all the parties work well together. This is perhaps one of the drawbacks of this type of financing. It has a lot of moving parts and requires a little bit of effort to make sure that everything works out well. This […]

Top Reasons For Changing Factoring Companies

The factoring financing industry is pretty competitive. Because of this, it’s not unusual for prospects to shop around to see if they can get a better deal somewhere else. However, changing factoring companies can be tricky and many times you will be better off staying where you are. If done incorrectly, changing companies can disrupt your business […]

Issues When Changing Factoring Companies

Although helping a client change factoring companies is something that is done every day, it’s a complicated matter that has to be handled delicately. The process has a lot of moving parts that have to be carefully orchestrated to ensure a smooth transition from the old provider to the new company. The biggest problem is that a mishap […]

Disadvantages of Invoice Factoring

While invoice factoring is a great product that offers flexible financing to companies that have cash flow problems – it is not a perfect product and like any products, it has some disadvantages. This short article will help you understand some of the disadvantages of invoice factoring and can be used as a tool in […]

Accounts Receivable Aging Report – Why Do Factoring Companies Ask for It?

As part of their application process, most factoring companies will usually request an accounts receivable aging report. This is the most important piece of information that factoring companies will ask you for. They use this report, along with other information,  to create their proposals. And for the most part – your rate, your advance and […]

How To Select The Right Factoring Company

Most factoring prospects go through the process of selecting a factoring company in a haphazard way. They usually search the Internet and start calling companies to get general information and collect applications. Once you have spoken to those companies, they will usually try to apply with as many factoring companies as they can, hoping that […]

Advantages and Benefits of Invoice Factoring

Invoice financing has been gaining prevalence as a way to finance companies that have cash flow problems due to slow paying customers. This short article will help you understand the advantages of invoice factoring. The basics What is factoring used for? Basically it’s a financial tool that helps your company if you are offering payment terms to corporate customers […]

How To Get The Best Factoring Rates

When looking for a factoring plan, cost is one of the most important variables that business owners seem to focus on. This makes sense, because many prospects have cash flow problems, and this makes them very sensitive to pricing differences. However, most business owners think that the most effective way to get the best best […]

What Types of Companies Should Use Invoice Factoring Services?

The use of factoring financing has increased in popularity in recent years. Although it is usually promoted as a very flexible solution, which is true, it should be noted that it can only be used successfully in certain situations. This short article will help you determine whether invoice factoring is the right solution for your […]

Are You A Good Candidate For Factoring Financing?

Factoring financing has been gaining popularity in the past few years. While invoice financing is a very effective product at helping companies that have cash flow problems, it is not for everybody. This article will help you determine if factoring is the right solution for you and your company. Do you have this problem? First […]

What is factoring due diligence?

While getting approved for factoring financing is much easier than getting approved for other forms of business financing, it does involve doing some due diligence. During this process the factoring company will need to determine that: Your company is properly set up The invoices are correct The commercial credit of your customers Your invoices have […]

The Importance Of Building a Cash Reserve For Your Business

For small business owners – cash is usually tight. There are expenses that have to be met quickly and customers that pay slowly. This combination makes it hard for business owners to build a reserve – even if it’s a small one. However, having a cash reserve is critical if your business is going to survive and […]

What is Spot Invoice Factoring?

Spot factoring is a type of financing where your company gets to factor a single invoice. Basically it’s  a conventional transaction, but instead of financing a portfolio of invoices, you only finance one. Factoring companies consider spot financing risky From a factoring company perspective, this type of invoice factoring is riskier than conventional financing. Because of this, […]

Difference Between Recourse Factoring vs. Non Recourse Factoring

We have recently written articles about non recourse factoring and about recourse factoring and wanted to opportunity to make a side by side comparison of the products. This should better help you decide which one is better for you. We’ll start by saying  that the subject of recourse and non recourse factoring is one of the most […]

What is Non-Recourse Factoring?

Non-recourse factoring is one of the most misunderstood subjects in the field of factoring finance – perhaps because use of the word non-recourse varies across the finance industry. Let’s first start with full recourse factoring agreements, since they are the simplest to understand. In a recourse factoring agreement, the client agrees to buy back the invoice  from the […]

What is Recourse Factoring?

Most factoring companies offer invoice factoring with full recourse. This means that your company has to return the advance (and sometimes pay fees) if your customer does not pay their invoice within the specified factoring time frame – usually 90 days.  The two most common reasons why factoring companies exercise recourse and return the invoices to a […]

Factoring Old Invoices

One common misconception is that factoring companies buy old invoices. This is actually not true. Factoring companies buy slow paying invoices from credit worthy customers, which helps your cash flow. Factoring companies don’t buy old invoices. By our definition, an old invoice is any invoice that is 90 days past terms is considered to be […]

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