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AR Cash Flow | Invoice finance factoring debtor

AR Cash Flow

Do you have clients that take 30, 50 or 60 days to pay their invoices?

Although having slow paying clients is expected in today’s business environment, they make managing cash flow a very difficult task. Paying suppliers, salaries and rent becomes a challenge.

However, there is a way to solve this problem. The solution can be debtor finance for your invoices.

Debtor finance is a financing tool that allows you to get your invoices paid in as little as 1 day. It provides your company with the necessary capital to operate the business, pay suppliers and grow. However, factoring is not a business loan. Rather, factoring involves selling your invoices at a discount for immediate cash. The factoring company waits to get paid, while you get immediate use of the funds.

Receivables finance can easily be integrated to any business and works as follows:

You deliver goods or services and invoice for them

You sell the invoice to the debtor finance company. They give you the first installment of 70% to 90% of your invoice. This is called the advance.

You get immediate funds to run your business

Once the customer pays the factoring company, you get the second installment (of 10% to 30%) and are charged a small fee for the transaction. This is called the rebate

One major advantage of accounts receivable finance is that it is easier to obtain than a business loan. Furthermore, the factoring line can be set up in about a week, and the biggest requirement for approval by a factoring company is that you do your business with credit worthy clients.

Small business factoring is easy to get

Do you:
Own a business that sells products or services to mid size and large commercial clients?
Have to wait 30 to 60 days to get paid?
Have to turn business away because you can’t offer 30 day terms?
Are at risk of missing rent, payroll or supplier payments?
Make at least $1,000 in monthly revenues?

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The common advantage of invoice factoring (debtor finance) is that it accelerates cashflow.
Normally the money it costs to produce a good/service is tied up in debtors and is not available for the business to use until payment has been received.
Some of the benefits are listed below:

Factoring invoices (receivables) provides you with predictable cash flow.
You will no longer have the uncertainty of when you’ll be paid
No real estate security is required
Your receivables factoring line has no set maximum and is tied to your sales growth. The more you sell - the higher your financing line
The factoring company helps you determine the credit of your customers before you sell to them. This helps reduce bad debt significantly
Accounts receivable factoring lines can be set up in a few days
Factoring fees are a tax-deductible business expense.
Factoring provides you cash flow without an increase in liabilities due to a loan.
Factoring eliminates the monthly payment associated with a conventional loan and no debt is incurred.
Once you begin factoring, you can have adequate cash flow and liquidity to pay your suppliers on time.
Take advantage of supplier discounts.
With additional working capital you can increase your business and make more profits.
Flexibility! We have immediate funding available for expanding startups, micro, small to mid-size companies.
Does not restrict your company to a fixed line of credit. Instead, the line increases as your sales grow.
Maintain relationship with your bank for future financial needs.

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