For example, if the customer goes bankrupt or closes during the factoring period - usually 90 days - the factoring company loses money. With non-recourse factoring, the factoring company evaluates your customer’s creditworthiness and agrees to take the loss if your customer doesn’t pay the invoice due to insolvency. With recourse factoring, if your customer doesn’t pay the invoice, you will either owe money back to the factoring company or have to offset the debt with another invoice. There are two basic types of invoice factoring. Invoice factoring can be used to streamline cash flow for a small business and minimize problems caused by slow-paying customers without taking on additional debt. ![]() After the factoring company collects the payment from your customer, they pay you the balance of your invoice, minus an agreed-upon fee. \Customers then send payments directly to the factoring company. ![]() Within a short period of time, the factoring company provides an immediate cash advance - usually between 60% and 90% of the invoice total. After you deliver a product or service to your customer, you send a copy of the invoice to an invoice factoring company. The process is relatively straightforward. That makes it more accessible to new companies without any credit history and established businesses with bad credit. Instead, factoring terms are based on the customer’s credit. ![]() Unlike other financing options, such as small-business loans or credit cards, invoice factoring isn’t based on the business or business owner’s creditworthiness. For $79 (or just $1.52 per week), join more than 1 million members and don't miss their upcoming stock picks. Motley Fool Stock Advisor recommendations have an average return of 372%.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |