One aspect that clearly differentiates invoice factoring from other forms of commercial finance is the speed and ease with which the funding can be set up. With minimal amount of paperwork, a factoring company can begin to make advances on invoices within a few days. This is in contrast to 30 – 40 days a bank needs to process a loan and 4 – 6 months an equity investor needs to do enough due diligence in order to close on an investment. Because the factor is constantly relying on the creditworthiness of the account debtor, (your customers,) it’s less important to do a more thorough investigation of your company’s financial condition and business plan.
It all begins with the application which is a simple 3 page questionnaire regarding the basics of the business. Together with a current accounts receivable aging report, an interim balance sheet and income statement, this will get you a term sheet proposal from CCA within 24hours. The term sheet outlines the rates for the factoring. Once the terms have been agreed to, a formal contract is sent out and customer credits are checked for funding limits. Then the process moves to customer notification and invoice verification and finally a wire transfer sends the funds directly to your bank account.