Summary: Factoring companies provide financing to businesses that have cash flow problems. They specialize in financing accounts receivable, which improves the client’s cash flow. Smaller factoring companies typically provide invoice factoring as their only service. However, larger providers typically offer additional products, such as purchase order financing, supply chain financing, and asset-based loans. This article […]
Frequently Asked Questions
How to Offer Net-30 Payment Terms Effectively
Summary: Waiting 30, 45, or even 60 days to get an invoice paid is a challenge for many business owners. Small companies often have to wait for payment because their commercial sales are made on credit. This type of trade credit is commonly known as “payment terms.” Companies must offer payment terms because their clients […]
Why Do Purchase Order Finance Transactions Need Inspections?
Purchase order finance companies typically require that the goods they are financing be inspected by an independent company prior to shipment. The inspection company verifies that the quality, quantity, shipment date, and other parameters meet the specifications of the purchase order. The inspection clause is usually written into the language of the letter of credit […]
Is Invoice Factoring Right for My Business?
Getting the wrong type of financing can negatively impact your business. It could even put you out of business in some cases. Unfortunately, many small business owners get the wrong type of financing for their companies. It may solve short-term problems but ultimately backfires. This article helps you determine if invoice factoring is the right […]
How to Choose the Best Factoring Company
Choosing the right factoring company is essential to the success of your business. The factoring market is very competitive, with many providers and different offers. In this article, we show you how to select the best factoring company for your business. Note: If your business is based in Quebec, read this guide. Is factoring right […]
What is a Factoring Notice of Assignment?
The Notice of Assignment (NOA) is a document that factoring companies use to notify your customers that your company is using invoice factoring. Most factors have a customized version of the NOA. However, the NOA usually informs your customers: That you are working with a factoring company To submit payments to a new account/address About […]
Pros and Cons of Invoice Factoring
Factoring invoices has been gaining popularity as a way to finance companies that have cash flow problems due to slow-paying commercial clients. Factoring works by providing an advance on these invoices. This advance provides cash flow to operate the business and grow. To learn more details about factoring, read “What is invoice factoring?” You can […]
Should You Factor Invoices That Are Collections Problems?
Factoring companies often get calls from prospective clients interested in factoring invoices that are hard to collect. These invoices tend to be substantially past due and have become collections problems. The prospect hopes that the factor will buy the invoice and take on the collection problem. Past-due invoices that have become collections problems cannot be […]
Can an Invoice be Factored Before Delivery?
Every so often, clients want to factor an invoice that has not yet been fulfilled. Basically, the invoice is for work that is about to begin or products that will be delivered soon. These invoices are commonly referred to as pre-delivery invoices. Unfortunately, these invoices cannot be factored. This article explains why factoring companies cannot […]
The Importance of the Accounts Receivable Aging Report
The Accounts Receivable (A/R) Aging report is a critical tool for managing your business. This is why most lenders and factoring companies request this report as part of their due diligence process. Unfortunately, it’s one of the most valuable yet underutilized reports. This article helps you understand the value and uses of the A/R Aging […]