| Factoring
Process Overview |
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| Pre-funding |
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| Before
a factoring company will advance your business, they
will have to approve your customers and secure their
interest in your invoices. This is done through an application
and due diligence process. |
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Sample factoring application
- Required financial
statements and other documentation
- Approval requirements and process
- Term sheets: information and samples
- How a factor secures interest in your business'
invoices
- Formal financing contract |
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| Funding
Advance |
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initial advance amount varies upon industry, but once
the invoice has been verified by the factor the average
advance is 80% of the invoice's face value. The funds
are usually advanced within 48 hours of the factor receiving
a submitted invoice. |
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Invoice verification
- The advancing process |
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| Payment
of the Reserve |
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| Once
your customer has paid the invoice, the remaining amount
called the reserve is paid to your business. The discount
and fees charged by the factoring company are paid from
the reserve. |
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Factoring fees and discount rates
- What if the customer doesn't pay? |
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