When an invoice finance company makes cash advances on accounts receivable, this type of financing is known as factoring. Factoring is very easy to set up, a company only needs to have invoices for completed work. The initial account set up with the factoring company takes a week or so. Once the factoring company is ready to fund on the invoices, the funds can be available within 24 hrs of finishing the job. For the most part there is no top end credit limit, so growing the company can be managed through the funding process.
One challenge for the overall factoring industry has been, business owners seldom even know that this type of financing is available. Many businesses have never even heard of factoring and know nothing about it. Using accounts receivable to provide working capital for the company operations is a useful tool. It’s easy to obtain and flexible to use. Given the right set of circumstances, factoring may be the best financing tool available.
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