What Is a Factoring Company?
This video describes a factoring company and what it does. A factoring company is a non-bank financial institution that buys your invoices and pays you immediately. The best invoice factoring companies enable you to take control of your cash flow, eliminating your worry about paying your staff or suppliers. You don’t have to wait 30 days for payment, which can be an advantage for many businesses.
Here’s what happens when you use the best invoice factoring company: You get paid quickly (usually within 24 hours). The invoice factoring company buys your invoices at a discount, so they’re generally happy to pay you immediately rather than wait 30 days or longer for payment from the client. The factoring company charges interest on their loans. The interest will vary depending on the term and other factors.
The process works as follows: A factoring company buys your invoices at a discount and then collects the total amount from your customers on your behalf. The amount you receive from the factoring company is called an advance and is paid immediately after the invoice is submitted to the customer. The money received from factoring covers some or all of your outstanding invoices.
