So what is it?
The basics of invoice factoring are simple. When you provide goods or a service to a customer you issue an invoice. That customer will take time to settle your account yet you have to meet the costs involved in providing those goods and services before you receive payment. The funds required to fill this gap are called working capital and this is generated by owner investment or retained profits.
If a business is new, or is expanding fast, the need for working capital outstrips these resources and it becomes necessary to find the money elsewhere. If you need to borrow it commercially assets are required as security from banks and often the obvious ones are those causing the lack of cash in the bank: unpaid invoices.
With invoice factoring money is advanced to a percentage of your outstanding invoices depending upon the quality of the customer/debtor invoiced and the spread of them too though some firms will look at single invoice finance. With factoring you get paid the balance when the invoice has been collected, less the charges for borrowing the money.
A wide variety of invoice factoring providers are available. Seek the advice of a competent adviser such as a specialist invoice factoring broker and challenge those who knock the product as most of them have not a clue as to what they are talking about.If you require working capital, contact us today or leave a comment below. EquipFund has access to immediate funds with setup times within 5-10 working days.