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To succeed in business, having cash is crucial for paying employees, stocking inventory, funding marketing campaigns, and other expenses. Unfortunately, a common challenge businesses face is customers not paying on time which can hinder achieving goals.
If your customers delay payment of their invoices, it could lead to a shortage of funds for your business. The longer it takes to receive payment, the more difficult it becomes to meet your goals.
To keep a business running smoothly, it requires a steady cash flow. If this becomes an issue, some business owners consider taking out loans. However, the process can be daunting due to underwriting requirements and time-consuming application processing by some banks. By the time the loan is approved, the initial cash flow problem may have already been resolved.
Invoice factoring is a reliable and common way to fund your business, particularly if you have poor credit history. It is easier to qualify for than conventional financing because eligibility is based on the creditworthiness of your customers.
The following is the list of the major requirements you will need to qualify for invoice factoring.
When searching for invoice factoring, it is crucial to prioritize unpaid invoices as they are the ones that require factoring.
Factors prioritize the creditworthiness of your clients over yours, as they are the ones responsible for paying your invoices. Therefore, it’s important to assess if your customers have a history of paying debts, good credit score, strong relationships, and positive feedback from other vendors. Meeting these criteria makes you a strong candidate for factoring.
To receive an accurate invoice factoring quote, you need to provide certain information such as business or personal contacts (phone numbers, email addresses), important business details, and monthly invoicing volumes. The application requirements will vary based on your specific needs. Keep in mind that the more information you provide, the more precise your quote will be.
Factors use reports to track outstanding invoices, unpaid bills, and credit memos. This helps them determine when they are likely to receive payment and submit the required paperwork for eligibility. It is an important part of factoring paperwork.
If you plan to use invoice factoring to support your business, you’ll need a business bank account since factoring companies do not provide cash or transfer funds to personal bank accounts. They only make payments to business accounts through wire or ACH transfers.
In addition, you must supply a tax identification number issued by the government. The factoring company will use this number to verify whether your related companies have met their current tax obligations. It will also assist them in determining whether you may owe any outstanding liens.
To verify your legitimacy, the factoring companies require you to submit personal identification documents such as your passport, driver’s license, or social security number.
If your business is looking to see if they qualify for invoice factoring contact Business Factors to talk to a factoring expert today.
Look no further for a reliable factoring company with enough reserves to solve your payroll problems. Business Factors & Finance was founded by 40-year-old factoring institutions and is a trusted name for working capital loans. We offer factoring options to businesses of all sizes and industries. So if you have cash flow issues, rest assured that we have a solution for you.
Call us at 800-672-3844 or send an online application to get started.
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