Do I need good credit to Factor Finance my accounts receivable invoices for immediate cash?

I hear from my friend that Factoring (cash for invoices) doesn’t use my credit score? 

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Factoring your open accounts receivable invoices can seem like a no brainer.  Who doesn’t want instant access to cash they have already worked for and earned?   For those of you who are a bit scared that you are going to walk into another situation where your credit rating is going to be scrutinized or that by factoring you are adding more debt to your books — HAVE NO FEAR!  On the contrary, if that is what’s holding you back REJOICE!  Let me introduce you to the wonderful world of factor financing.

Factoring does not impact your personal or business credit.  In fact, factoring does not require you to have any credit history at all.  Factoring has everything to do with the people and companies you do business with.  You see, when a factor finance company partners with you and purchases your open accounts receivable invoices, their terms are based on the creditworthiness of YOUR CUSTOMER. The Factor will also help you realize if businesses are high or low risk, good or bad for your business.

Here comes the “infomercial” pitch:  But WAIT there’s more!

That’s right!  If you factor within the next 24 hours, you can:

  • Restore or INCREASE YOUR CREDIT RATING
  • Spend less time in the office
  • Grow your business

How can factoring restore and/or increase your company’s credit rating?  Easily.  The key to having a great credit score is paying your bills on time and not carrying too much debt. As a business, we understand the challenges of waiting too long for customers to pay. You need cash to cover day-to-day business expenses, pay employees and more. Less cash on hand means an increase in late payments from your business which can become a day-to-day nightmare for your company and even personal credit score.  Once your late on a few bills and even worse behind on payments every week, it ends up costing you a lot more to bail yourself out.

Having a good credit rating is important for your business.  Yes, factoring your open accounts receivable invoices allows you to have access to unlimited cash flow (limited only by how much business you complete).  However, there might be a time when you need to borrow a larger sum of money as you grow and expand.  For example – In the case of a start-up, it’s usually the personal credit of the business owner themselves that is on the line when trying to get a traditional bank loan. But what if the personal credit of the business owner is just okay, and doesn’t meet the requirements of the local lending bank? You don’t get the loan, that’s what happens. So if you’re looking to get paid from assets you’re business already owns, like your accounts receivable invoices then give factoring a try, you’ll be glad you did and you’ll also be working toward establishing the creditworthiness of your business.

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At Factor Bid, we thought of the hard working business owner who needs to cover daily expenses and dreams of growing their company to the biggest and best.  Yes, we are awesome at what we do.  How awesome are we:

  • We personally know and work with quality factors within every industry
  • We take two minutes of your time instead of hours spent traditionally in researching factor finance companies
  • At Factor bid -factors compete for the opportunity to buy your open invoices, so you get the best possible deal when factoring your accounts receivable invoices. 

Don’t wait 30,45 or 90 days, submit your invoice at factor bid and get paid as soon as today for your outstanding invoices.

When factors know their competing for your business at the same time, they’re more likely to give you their very best offer right out of the gate in order to win your business, which means a better rate, better terms and more money in your pocket!

Factoring on the GO!

Download Factor App – the only factor financing app that gets you the most money for your A/R invoices.

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What is Accounts Receivable A/R discount finance and how can it help your business outperform your competition?

Outstanding and/or ‘open invoices’ represent invoices that have been sent out to a client for payment, but have not yet been satisfied/paid by the client. These invoices can be financed or A/R discounted for less than the face value to quickly raise capital and increase cash flow.

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The buyer of the A/R Invoices also know as the (factor) purchases the financial obligation at a discounted rate providing the selling firm (that’s you) with immediate cash. The factor now assumes responsibility in collecting the money owned by the original debtor (or the company you originally provided your product or services for.)

The invoice is sold at a discount, which is typically 85-90 percent of face value. The Factor requires a percentage of the invoice remains in reserve in order to reduce their total risk, in assuming responsibility for collecting the outstanding debt. Once the debt is collected by the Factor, you’ll receive the reserve amount of the invoice or the percent that was held back -minus any service fees.

Here is just one example of the fee scale from one small factoring company. Every Factor is different and you should use Factor.bid to shop your open invoices for the best deal when factoring.

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If this fee structure seems high, what is the costs of not factoring?

The Costs of not Factoring:

  1. Time value of money
  2. Benefit of improved cash flow
  3. Cash within 24 hours
  4. Pay Suppliers faster
  5. Receive discounts from suppliers
  6. Make payroll without using personal finances
  7. Offer longer terms to larger customers
  8. Attract more business
  9. Business growth without incurring more debt at your bank
  10. Lowers your business liability / risk in collecting payments

Will the financial benefit of improved cash flow to your business offset the fees associated with Factoring, And then some? In many cases Factoring is a smart business decision and can aid your company in growth and new found business opportunity.