Expert Professional Services with Factura First

THE BENEFITS OF INVOICE FACTORING INCLUDE:

Same-Day Funding on Receivables

Low Factoring Fees

Week-to-Week Contracts

You Select Which Invoices You Factor

Dedicated Receivable Specialists

Turn Your Invoices Into Funds now

Invoice factoring is a financing solution that delivers consistent funds to your business when needed. Waiting for invoice payments from your customers is frustrating. That's where we can help. We provide immediate funding for your unpaid invoices so you can keep up with business demands such as bills, payroll, new resources, and growth.

Accounts Receivable Management Services

Our A/R management team is committed to finding the most effective way to work with slow-paying debtors. We strive to build trust by demonstrating that we're here to work with them, not against them.  We work diligently and respectfully with the right individuals to help them stay current on their obligations. 

Is Factoring a Good Investment?

Determining whether factoring is a good investment for a company will depend on many things, including the specifics of the company—the type of business and its financial condition. Generally, factoring is a good investment choice for a business because it increases liquidity, increases competitiveness, improves cash flow, is efficient, removes the need for good credit, and reduces the reliance on traditional debt.

How Does Factoring Work?

Suppose a company is waiting on payment from its customers. Depending on the company's finances, it may need that cash to continue operating its business or funding growth. The longer it takes to collect the accounts receivables, the more difficult it is for a business to run its operations. Factoring allows a company to sell off all of its outstanding invoices at one time, rather than having to wait on collecting payments from customers. 

What Is a Factoring Company?

A factoring company specializes in accounts receivable financing—or more simply, factoring. A factoring company purchases invoices from businesses that need an immediate boost in their cash flow. A business may be in the position of waiting days or weeks or months for its customers to pay their invoices; for a company that is growing rapidly and needs cash to take advantage of new business opportunities, this can be too long to wait. Therefore, they may work with a factoring company. The factoring company will pay the full amount of the company's invoices, less a small discount for commission and fees.

Types of Factoring Services

There are three main types of factoring services: recourse factoring, non-recourse factoring, and spot factoring.

Recourse factoring is the most common type of factoring service. In this arrangement, the business is responsible for any unpaid invoices, and the factor has the right to recourse the unpaid invoices back to the business.

Non-recourse factoring is a type of factoring service where the factor assumes the risk of unpaid invoices. If a customer fails to pay an invoice, the factor absorbs the loss, and the business is not responsible for repaying the factor.

Spot factoring, also known as single invoice factoring, is a type of factoring service where a business can choose which invoices to sell to the factor. This allows businesses to have more control over their cash flow and only factor invoices when needed.

How Can Factoring Services Help Your Business Grow?

Now that we understand what factoring services are let’s explore how they can benefit your business and contribute to its growth.

Improved Cash Flow

One of the most significant benefits of factoring services is improved cash flow. By selling their accounts receivable, businesses can access the funds they need to cover expenses, invest in growth opportunities, and keep their operations running smoothly.

This is especially beneficial for businesses with long payment cycles or those that experience seasonal fluctuations in cash flow. With factoring services, businesses no longer have to wait for their customers to pay their invoices, allowing them to have a more consistent and predictable cash flow.

Increased Working Capital

Factoring services can also provide businesses with increased working capital. By selling their accounts receivable, businesses can access a significant amount of cash quickly, which can be used to invest in growth opportunities, purchase new equipment, or expand their operations.

This increased working capital can help businesses take advantage of opportunities that they may not have been able to pursue otherwise, ultimately contributing to their growth and success.

Outsourced Collections

Another benefit of factoring services is that it outsources the collections process to the factor. This means that the factor is responsible for collecting the outstanding invoices from the business’s customers, freeing up the business’s time and resources to focus on other aspects of their operations.

This can be especially beneficial for small businesses that may not have the resources to dedicate to collections or for businesses that have customers with a history of late payments.

Factoring Payroll Services

Factoring services can also be used for payroll financing. This is especially useful for businesses that have a large number of employees or those that experience seasonal fluctuations in their workforce.

By factoring their payroll, businesses can ensure that their employees are paid on time, even if they are waiting for payment from their customers. This can help businesses maintain a positive relationship with their employees and avoid any disruptions in their operations.

How to Choose the Right Factoring Service for Your Business

When considering factoring services for your business, it’s essential to choose the right factoring company. Here are some factors to consider when selecting a factoring service:

• Reputation: Look for a factor with a good      reputation and positive reviews from other businesses.
• Industry experience: Choose a factor that has experience      working with businesses in your industry.
• Factoring fees: Compare factoring fees from      different factors to ensure you are getting a competitive rate.
• Customer service: Choose a factor that provides      excellent customer service and is responsive to your needs.

What is reverse factoring ?

In reverse factoring, a third party pays the seller on behalf of the buyer. This is often used in the business environment when companies commission reverse factoring to pay their suppliers.

Reverse factoring vs. factoring

In reverse factoring, the buyer of goods initiates the factoring contract. Therefore, it is exactly the reverse process to factoring, where the seller assigns his receivable to a factoring service provider, receives payment from the latter and the service provider then takes care of collecting the receivable from the buyer.

Reverse factoring arrangement or agreement

In reverse factoring, an agreement is first made between the buyer and the seller, because the seller must agree to payment through reverse factoring. Then the buyer concludes a contract with a factoring provider in which the conditions are specified.

Among other things, the contract contains information about the fees for the service and when the buyer has to pay the provider. In most cases, a date is negotiated that is later than the due date of the actual invoice, so that the buyer can push the due date further into the future and preserve his liquidity for longer.

How does reverse factoring for companies work?

Reverse factoring is often used by companies when they want to offer their suppliers early payment, but themselves want to hold back the money for payment even longer.  He pays the supplier immediately, and is then paid at a later date by the ordering company.

Benefits of reverse factoring

Reverse factoring can benefit both buyers and sellers in several ways. The biggest advantage for buyers is that they can negotiate a longer payment term with the reverse factoring provider than their supplier would grant them. Because the supplier is also secured in his payment and receives it immediately, the buyer can negotiate better delivery conditions.

The relationship between buyer and seller is strengthened as the reverse factoring provider acts as an intermediary to ensure a smooth payment process. In this way, long-term supply contracts can be concluded that ensure security of supply for the buyer.

If the buyer enters into a reverse factoring agreement for several suppliers, he also has less hassle when it comes to payment: instead of paying each supplier individually, he only pays the reverse factoring provider.

For sellers, reverse factoring provides security in two ways: They get paid immediately, which allows them to maintain their liquidity, and they can be sure that they will receive payment.