Receivables Factoring

 

Invoice factoring is a useful tool in acquiring much-needed working capital for businesses of every size. Factoring volumes continue to grow each year, yet many business owners and financial executives aren’t aware of or effectively use this form of financing. The term “factoring” refers to the outright purchase and sale of accounts receivable (A/R) invoices at a discount from their face value.The structure, terms and conditions of such a transaction may vary in any number of ways, as evidenced by the array of factoring programs currently available throughout the United States.

Companies engaged in the business of buying accounts receivable are called “factors.” Factors often exhibit a flexibility and entrepreneurial awareness rarely demonstrated by banks and other secured lenders, whose activities are more generally restricted by regulation and prevailing law. Companies selling their receivables are typically referred to as “clients” or “sellers” (not “borrowers”) The client’s customers, who actually owe the money represented by the invoices, are generally known as “account debtors” or “customers.” The cash which a factor issues to a client as initial payment for factored invoices is typically called an “advance.”

NEW MONEYSimply put, factoring is the sale of a company’s business to business accounts receivables at a discount for immediate cash. Note that the services rendered or products sold must be to creditworthy business customers, not individuals. Any company generating accounts receivables with credit worthy customers can take advantage of the cash flow benefits offered through small business factoring service providers.

Factoring with A/R funding does not rely on the credit or assets of your small business, but provides funding based on the strength of your customers ability to pay. Business owners can unlock the money tied up in their invoices, quickly and efficiently, giving them the flexibility and cash they need to grow their business

Invoice factoring is a unique form of flexible financing that can grow with you as you as you grow your business.  And HFS can help our clients find the best types of financing products and services available at competitive rates.

Improve your cash flow, access new working capital and protect your credit rating, contact us today to find out how receivables factoring can help your business grow.