Invoice factoring is an advance where a business sells its invoices at a discounted price for immediate access to working capital. It can take anywhere from 30 to 90 days for most businesses to receive payments from their customers, which is a long time when you have immediate business needs and employees to pay. Therefore, for those businesses an invoice factoring advance would make the most sense so they may receive quick access to funds to meet those business needs.
The funder will then proceed to receive payments on your invoices directly from your customers or you will forward your customer’s payments to the funder, until the entire advance amount is paid off. One of the advantages of this type of financing is that it allows your business to turn your outstanding invoices into upfront working capital. The important thing to note about this financing is that most funders will review the businesses outstanding invoices to make sure that your customers have a history of making payments on time. Nebula Finance works with many funders that offer fast and simple ways to obtain an invoice factoring advance.
Advance amounts starting at $20,000 and range up to $10 million.
Apply and submit your outstanding invoices.
Get immediate access to capital on outstanding 30, 60 or 90 day invoices.
All you need are 2 important things to apply.
You can apply online from anywhere and on your device. Just click the GET QUOTE button at the top of the page. Let us know about your company and your goals, and remember to collect the necessary documentation.
Our team will review all the information provided to us. If we need additional information, our team of business advisors will reach out to let you know.
If approved, our team will proceed to send out the approved funds to your business bank account.
Invoice factoring works by funders purchasing a business’s invoices at a discounted rate, and providing the business with access to fast working capital for their business needs. In other words, a business can sell their pending invoices at a discount to a funder for quick access to capital. The funder will then continue to collect payments from the invoices purchased.
The answer varies as there are many factors funders will take in consideration to approve a business other than just credit history. However, it is important to note that most funders are more focused on the outstanding invoices (and the payment history of those customers) versus the business’s credit history. The reason being is that the funder will collect the payments on the outstanding invoices once the funder purchases the invoices from the business. This does not mean that each funder works this way, and may vary based on the funder that purchases your invoices. An important tip is to ensure you are selling business invoices that have a good history of on time customer payment, this will give you higher chances of being approved by a funder.
Every single funder has different requirements that must be met. As a general rule, most funders require that the business sells to other businesses, have customers that have a history of on time payments, is located and operates in the United States, and has invoices that pay on 30, 60 or 90 day terms. As mentioned, this is a general rule and may not apply to all funders.
This type of financing is ideal for businesses that do not receive payments for their products or services immediately but rather receive payment on their invoices in 30, 60 or 90 day terms. However, during that time frame the company faces a lot of business needs that require working capital.
Invoice factoring financing has a lot of great pros for a business. This type of financing gives you quick access to working capital, grants a business improved cash flow, and the approval for this of financing is usually more flexible and easier to apply. Lots of businesses take great advantage in being able to improve cash flow by creating great relationships with their customers as invoice factoring allows them to provide their customers with longer payment terms.
Yes, invoice factoring is a type of accounts receivable factoring.
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