Invoice Financing, also known as accounts receivable financing or factoring, is a method for funding a business that’s been around for a long time. It has come back into more common general use recently, especially when traditional bank loans become difficult to obtain. It may be a good way to quickly bring in capital to fund business operations, especially if your customers generally take a long time to pay.

How Invoice Financing Works

Many types of financing involve some type of a loan, putting the business in a position of having to pay back debt. Invoice financing is a different type of funding altogether: In this case, the business sells its unpaid invoices to a third-party financing agency. In return, the business gets a fast, up-front, lump-sum payment of cash.

Here’s How Invoice Financing Works:

-A business sells its yet-to-be paid invoices to a financing agent
-The business is immediately given a high percentage, but not 100%, of the face value of the invoices
-The discount of the total invoice value is known as the factoring rate, which can vary depending mostly on the past payment history of the customers
-The money received by the sale of unpaid receipts can be used in any way the business owner sees fit: payroll, new product lines, debt consolidation, you name it

Another important aspect of invoice financing is that there is minimal paperwork required by the financing agent. Also, the business’s credit history does not need to be stellar either. The agent is more interested in the creditworthiness and payment history of the business’s customers. This is because when they buy the invoices from a business, they will collect from the business’s customers, not the firm itself.

Contact Us Today

The team at Rushview Commercial Funding awaits your call. They can assist you with any questions that you may have and get the application process started.