What is Invoice factoring?
Invoice factoring can be the perfect working capital solution and doing business. It is like a form of accounts receivable management. Invoice factoring is a financial transaction and a type of debtor finance. In an invoice factoring agreement, a business sells its accounts receivable (invoice) to a third party (called a factor) at a discount. Invoice factoring is a part of running a business. The Prafton Finance funding process is easy and flexible. You’ll have the opportunity to get higher credit limits based on the strength of your customers. Our fee structure is transparent, so you always know hoe exactly how much the factoring will cost you. Instead of collecting recurring payments, they charge a weekly fee that’s due when the invoice gets paid.
Invoice factoring offers great flexibility for business owners. Accounts receivable financing has a stricter guideline related to the credit profile. With that said, financing will usually provide business with preferred financing terms. We somehow offer you a combination between invoice factoring and a small business loan having advantages like Funds receivable before invoices are ready to factor, increase your over-advance maximum amounts, access to short-term bridge loans, remove merchant cash advance programs or liens, forecast cash flow with AI technology.
“We compare the invoice finance market by promising you five W’s”
We release the funds to improve cash flow.
We provide you with a quick finance solution.
We assure you not to chase payments.We offer you great flexibility for your business.
HOW DOES INVOICE FACTORING WORK?
Step 1 – Your B2B or B2G company provides goods or services to larger creditworthy customers and submit correct invoices. It takes less than ten minutes to apply online. You provide a few basic details about your business, then the application approval process takes up to 24 hours.
Step 2 – Your company needs to be paid sooner than agreed terms (i.e., 30-90 days) with your customers. Once approved, simply you need to submit any unpaid invoices by syncing your accounting software or uploading them.
Step 3 – Your company sells its unpaid invoices to an invoice factoring company per a factoring agreement.
Step 4 – The factoring company verifies the invoices are valid with the B2B or B2G company receiving up to 90% of the invoice amount.
Step 5 – The larger creditworthy customers make payment directly to the factoring company according to the terms of the invoice.
THINGS TO CHECK BEFORE SELECTING AN INVOICE FACTORING COMPANY
There are a lot of in factoring companies in vast, so it’s important to carefully consider your business needs, what services are available to you and which companies have the best offers.
Firstly, ensure that you are eligible to use the service. Most of the factoring companies have services that evaluate work with startups, and many will not turn you away if you have poor credit or a bankruptcy. Prafton Finance is a non-recourse factoring company that ignores the personal credit of a business owner and instead focuses on the customers’ ability to pay.
Secondly, choosing the best factoring service for your business also depends on how delinquent your invoices areas some companies don’t accept delinquent accounts or only accept invoices that are up to 45 days delinquent.
Lastly, considering the factoring service’s approval and funding process. The best service has a quick turnaround time for approval and funding. Many of the services we evaluated will review your application within 24 hours and can transmit funds from the time you submit an invoice to be factored.
BENEFITS OF CHOOSING RAPID FINANCE AS THE BEST FACTORING INVOICE COMPANY
Prafton finance can be a good option for improving your business cash flow, and there are many benefits of working with rapid finance:
- You get cash immediately: The most obvious benefit of working with prafton finance is that you get cash fast. Traditional payment terms require customers and clients to pay in several time intervals. If someone is waiting for an invoice for 90 days you may damage the relationship with the clients.
- Factoring is both a short-and long-term solution: Factoring can be a great way of funding your operation during the off-season when business is slow, you’ve hit a rough patch or your business is growing rapidly. It can also be a solution you use year-round to ensure steady cash flow.
- It’s generally easier than applying for a loan: In many cases, a traditional business loan is still the best way to get an injection of capital, but it takes time and requires a lot of paperwork. Factoring is fairly straightforward, and many companies will put cash in your hand within 48 years of applying.
- The requirements are straightforward: Generally speaking, you qualify if you operate a business with a commercial or government clients and if your business is free of liens, encumbrances, and legal problems.
- New and small businesses can use factoring: Without an established credit history, new businesses may struggle to find a traditional lender who will offer them a line of credit. Further, small businesses may not have a strong enough profit margin to attract a lender. Many factoring companies, on the other hand, work with startups and small businesses.
- You’re line increase with your growth: Factoring scales with your business, which means you get access to more funds as you gain more customers or clients.
- Your voices are collateral: With a traditional business lender, your personal and business assets can be used as collateral. This can include real estate, business equipment, inventory, vehicles, and intangible assets. With factoring, the invoices are your collateral, which means you don’t have to surrender critical business or personal assets if your business is struggling.
When considering factoring services, we looked at two elements: features and eligibility. For features, we considered the rates and fees the factoring services and their processes. We scoured websites and contacted dozens of factoring services to get answers to our questions and also to gauge their level of customer support. While some companies weren’t as responsive, most of the companies we reached out to quickly responded, supplying the requested information.