Navigating the financial landscape in business can be a challenge, especially when untimely invoice payments put a brake on your cash flow. Enter invoice factoring, which is your key to overcoming this hurdle. At Atlantic Funding Co., we help businesses unlock immediate cash from their unpaid invoices by connecting them with leading factoring service providers.
What is Invoice Factoring?
In simple terms, invoice factoring is a financing tool that turns unpaid invoices into immediate capital. Unlike traditional loans that add to your debt, invoice factoring opens up funds that are rightfully yours, making it an attractive financing method for businesses across industries and levels of operation.
How Does Invoice Factoring Work?
Once you deliver a product or service to your customer and issue an invoice, Atlantic Funding Co. can help you find a factoring company. The factoring company purchases your outstanding invoices at a reduced rate, provides you with a substantial portion of those funds upfront, and is responsible for collecting the payment from your customer.
How Much Does Invoice Factoring Cost?
Factoring costs may vary depending on the specific terms extended by the factoring company, but they usually involve a percentage fee based on the total invoice amount. This fee correlates with the risk undertaken by the factoring provider and the time it takes for your customer to settle the invoice.
Invoice Factoring Rates
Factoring rates can vary depending on diverse elements such as industry, invoice volume, and payment terms. As your broker, Atlantic Funding Co. is committed to seeking out highly competitive rates for your business and discussing these thoroughly during our application process.
Invoice Factoring Requirements
Obtaining invoice factoring is simple and direct. Fundamentally, businesses need to show:
Operational Status: The company should be in operation and functioning to provide a particular product or service.
Quality of Invoices: The business needs to have invoices for completed work or delivered goods.
Creditworthy Customers: While the business’s credit score may not be a significant factor, the creditworthiness of its customer base is essential. The customers should have a sound credit history and show reliability in fulfilling payments.
Remember, different factoring companies may have additional requirements or variations based on industry, business size, invoice volume, and other factors.
How Factoring Accounts Receivable Can Benefit Small Businesses?
Factoring accounts receivable presents diverse benefits for small businesses, starting with the principal advantage of immediate access to capital. By quickly turning outstanding invoices into cash, companies can mitigate conventional wait periods and better manage cash flow. This immediate liquidity also offers businesses the leverage to seize growth opportunities like inventory investment, new project acquisition, or expansion initiatives without accruing additional debt.
Another significant advantage is reduced credit risk, as the risk of late or non-payment from customers falls under the province of the factoring company. Additionally, factoring companies handle the debt collection process, significantly reducing the burden of accounts receivable management and providing welcome administrative relief for the business.
The scalability of funding, completely in sync with the company’s sales volume, makes factoring incredibly flexible. As a business’s sales volume rises and invoices more, the available funding proportionately increases. Lastly, having constant liquid cash on hand allows companies to ensure timely payments to suppliers and creditors. This reliability can lead to better-negotiated terms, discounts, and healthier relationships within the supply chain, significantly contributing to positive business dynamics.
The Invoice Factoring Process
- Initial Consultation: Discuss your funding needs with Atlantic Funding Co. or complete an online application.
- Factoring Proposal: Receive a proposal, review the terms, and prepare to engage the factoring company.
- Verification and Advance: The factoring company verifies your invoices and offers you an advance.
- Collection and Settlement: The company collects payment from your customers and sends you the remaining balance minus their fee.
Invoice Discounting: Advantages and Disadvantages
With factoring, the company takes on managing collections, saving your business precious time. Though some might perceive a slight relinquishing of control as a drawback, the benefits, like improved cash flow, no added debt, and reduced accounts receivable management activities, typically overshadow any potential negatives.
Apply Today
Atlantic Funding Co. is more than just a broker; we aim to be your strategic partner in commercial finance, paving the path to your success with simplified, streamlined financial solutions.
Don’t let delayed invoice payments bottleneck your business growth. Explore how invoice factoring can cater to your cash flow needs with Atlantic Funding Co. Contact us and complete an online application today.
