Invoice Factoring

Kristin Gabriel asked:


u nervous about paying employees and paying suppliers on time? Are you waiting from 30 to 90 days after completing a job in order to get paid by the general contractor or your client? If you are a subcontractor working on a project, then you could qualify for something called construction factoring.

These are some of the biggest challenges for construction subcontractors, especially in today’s economic climate. It may be even more of a challenge if your business is new and does not yet have much operating cash. Few people can afford to wait 90 days to be paid, and even fewer can qualify for a loan due to the tightening of the credit markets.

However, suppliers and small to mid-sized subcontractors can get their invoices paid in as little as two days, using a tool called construction factoring.This means you will have predictable cash flow.Compared to bank financing, construction factoring is easy to set up and obtain.Furthermore, few of them can really qualify for a business loan. However, factoring provides with an alternative business financing option to help contractors meet their business obligations and grow. Invoice factoring accelerates slow paying invoices by financing them through a factoring company.

Here’s how it works:

- A contractor or supplier delivers the product or service, and then sends an invoice.
- invoices are then sold to the construction factoring company, who advances the funds to you.
- It’s important to do business with reputable general contractors or construction companies.
- Once the general contractor or client pays the invoices, the transaction is complete. There will be a competitively priced factoring fee associated with the service.
- Choose one of many factoring companies that is set up do handle construction factoring.
- You can begin factoring invoices very fast.

Construction factoring can bring in funds for invoices quickly and effectively, providing the necessary cash to meet your current obligations, and to also take on bigger jobs.

How does construction factoring work?

Using contractor factoring is a very simple, standard process such as:

- You deliver your products or services to your customer.
- You send the invoice to your client and a copy to your factoring company.
- Invoice verification with the general contractor takes place.
- The factoring company advances you up to 85 percent. Construction factoring is different from bank financing because it is easy to obtain and can be set up very quickly.

Benefits to factoring construction invoices include:
1. You won’t have to wait to get paid for your work.
2. Factoring is easy to obtain and can be set up very quickly.
3. You get an advance quickly after invoicing.
4. Construction factoring grows with your projects.
5. It provides predictable cash flow. Construction factoring is simple to use and can easily be integrated to your business.

Once you complete the job, you just send an invoice to your client and a copy to the factoring company. The invoice is verified with the general contractor client, and last, you get the first invoice advance. Once your client pays, you receive the remaining funds, less a fee.

Invoice factoring can apply to subcontractors in fields including: architects, asphalt, carpenters, ceiling, concrete, electrical, drywall, excavators, HVAC / mechanical contractors, paving, plumbing and roofing.

For Commercial Finance Loans – Factoring Loans * Equipment Financing * Purchase Order Finance * Commercial Mortgage – IMM Financial has been in the Commercial Finance Business serving companies just like yours for over 14 years. Put our experience to work for you. We are the Cashflow Specialists.

Carson Nash asked:


Factoring, Invoice Factoring, Accounts Receivable Factoring, Receivables Factoring, Factoring Account Receivables, and Receivable Factoring all mean the exact same thing. The selling of a company’s accounts receivable or invoice(s) at a discount, to a factor, who assumes the credit risk of the account debtors. Essentially it is the sale or assignment of accounts receivable or invoice(s) for immediate cash. This provides businesses from start-ups, mid-size, and large companies access to immediate working capital and provides cash flow for expansion or growth without incurring debt or reducing equity.

Accounts receivable financing is not a loan, so there is no need to make payments or create debt for your business. The major advantage of accounts receivable factoring is that it is easier to obtain than a business loan from a bank. Most factoring companies will approve a business based on the credit worthiness of the companies that are being invoiced and will not require a business’s financial statements or any repayment guarantees.

Generally, the business will receive 70%-90% of the invoice amount in 24 to 48 hours after an account is established with a factoring company. When the factoring company receives payment for the invoice, the remaining 10%-30% is paid to the business less a service fee between 1.5% to 3% of the invoice amount per month. The factoring companies’ service fees vary based upon monthly volume, industry, and location.

Types of commercial accounts receivable factoring include Invoice Factoring, Purchase Order Financing, Freight Bill Factoring, Construction Factoring, Government Contracts, and Medical Factoring. Industries include manufacturing, service, staffing, distribution, wholesale, communication, pharmaceutical, printing, telecommunication, and transportation companies and many others.

Once a factoring company has purchased invoices the factor becomes a bookkeeping service and collection service for the business that frees up valuable time for the proprietor to concentrate on running the business.

Factoring offers many options which a company can choose to meet its current business needs. Using the services of a factor, a business gains a valuable financial partner who can provide administration, working capital, business expertise, and financial business guidance. With a factor as a partner, a business is able to focus on developing, producing, and selling its products or services.



For Commercial Finance Loans – Factoring Loans * Equipment Financing * Purchase Order Finance * Commercial Mortgage – IMM Financial has been in the Commercial Finance Business serving companies just like yours for over 14 years. Put our experience to work for you. We are the Cashflow Specialists.

Article Manager asked:


The success of a business is determined on various factors such as employees’ financial status, transaction with suppliers, advertisements for brand promotion, dealing with emergencies and many more in a particular year. Generally, most businesses fail to fulfill the aforesaid business criteria due to the shortage of money or capital. In such a situation, invoice discounting can be the best option to generate the much needed capital. In general, invoice discounting is a process in which the business owner can borrow money from a factoring company in exchange for accounts receivable or outstanding invoices. Of late, the market is flooded with factoring companies that offer invoice discounting service to small and medium-sized companies. 

What is the importance of invoice discounting in the business fraternity? Usually business involves credit and the very term forces businessmen to opt for invoice discounting. Put simply, a company usually offers products and services to other businesses on a credit basis, thus experiencing the shortage of cash flow when meeting emergencies. In this instance, a cost-effective financial institution may help you out of this situation. The factoring company is one such institution that purchases your outstanding invoices and offers you cash at a discount within a matter of ten days. 

Invoice discounting works significantly in increasing your capital, payment transaction with suppliers, expansion of the business, meeting employees’ demands, and launching new projects without compromising on your monthly financing. Unlike the loan, the rate of interest in invoice discounting is minimal and can be calculated on a daily basis. However, with a number of individual financers and banks both offering invoice discounting, the rates are highly competitive. Plus, less paper works and little or no collateral whatsoever may turn out to be essential factors to opt for invoice discounting.

If you think of improving your business credit history, invoice discount could be the best option to maintain a steady flow of cash in your business. With the assist of the right financer; you can easily avail money at a meager rate of internet.



For Commercial Finance Loans – Factoring Loans * Equipment Financing * Purchase Order Finance * Commercial Mortgage – IMM Financial has been in the Commercial Finance Business serving companies just like yours for over 14 years. Put our experience to work for you. We are the Cashflow Specialists.

Kris Koonar asked:


Every business that has substantial credit clients is bound to experience regular shortage of ready funds, when it is required the most. If you are one such business owner, then it is not possible to run to the nearest bank to arrange for a loan every time you face a cash crunch.

A better mode of arranging finance to overcome any shortfall is to go in for business factoring. This is a very simple method of receiving cash payments against your credit invoices. A business factoring company simply ‘buys’ your credit invoice, after you have issued it to your client. The company then proceeds to wire the amount of that invoice into your bank account within 1 or 2 days after deducting their factoring fee that usually falls in the range of 1.5% to 5% of the value of the invoice based on certain factors.

But, although this features definitely helps you to overcome your cash flow problems instantly, this flexible tool offers much more than just money. Business factoring offers you a choice of either joining up for recourse financing or non-recourse financing. While recourse factoring would be cheaper for you, it would mean that in case your client delayed your payment or even failed to make the payment, the risk would lie on your head. In non-recourse factoring, your factoring company would assume the entire responsibility of collecting the payment from your client. The charges would be on the higher side, but you will simply have to forget about your collection worries, once you have issued the invoice in your client’s name and sold it to your factoring company. So, in addition to providing you money, business factoring can also free your mind from collection worries and this move will also save a lot of time, which can then be spent in increasing your sales.

A business factoring company also checks the credibility of your credit customers, in order to set the factoring fee level. This could again prove to be a boon for you, since you would be able to check the risk factors associated with supplying to a particular client. The fact that you are getting your money instantly would not only enable you to meet your routine expenses without any problem, but it would also boost your confidence to carry out your expansion plans without worrying about finance. In case you enter into a non recourse agreement then your collection aspect would also become much more professional, since the factoring company would be able to concentrate more on collections than you would, since their earnings depend on faster collections, whereas you might be too distracted by the other aspects of your business to put in the required energy for effective collections. Over a period of time, you would also manage to build up a good relationship with your factoring company and this would help both your businesses to grow together and complement each other.

Thus, business factoring not only opens the flood gates for an increased cash flow, but also takes over your collection operations, and frees your mind from the unwanted job of asking for your money, while also providing you with enough confidence to implement your expansion plans. Business factoring therefore offers you an entire financial and mental package to quickly take your business on a new level.



For Commercial Finance Loans – Accounts Receivable Financing * Business Equipment Leasing * PO Finance * Commercial Property Mortgage – IMM Financial has been in the Commercial Finance Business serving companies just like yours for over 14 years. Put our experience to work for you. We are the Cashflow Specialists.

Kris Koonar asked:


When you run a business that caters to a lot of credit clients, there are times when you need ready cash to meet your daily expenses or even to fund your expansion plans. You may be hoping for a way to unlock your money that might be locked until due date of your invoices. The following conditions can provide you with hints to estimate the right time to opt for business factoring.

When Your Cash Flow Is Choked. If you find that you have supplied your products or services to reputed clients and even earned a high profit margin, but are unable to arrange for timely finance to meet your regular expenses, then business factoring could be the ideal solution. These factoring companies can purchase your credit invoices and wire that invoice amount to your bank account within 1 or 2 days minus their factoring fee, which could be in the range of 1.5% to 5%. This could immediately put an end to your cash flow woes and you could meet all your expenses. If you have quality clients, providing a credit period of around 30 to 60 days and provide a high volume of business to your factoring company, then you could get away by parting with a very reasonable factoring fee.

When Banks Do Not Give You That Loan. If you find that banks are not willing to advance you any loan due to non-availability of collateral or guarantees, then business factoring could help you. If you are a start-up company, then you will not be able to provide the mandatory 3-year financial statements that banks usually require. You will also realize that banks will only loan you a fixed amount for a fixed term and you will need to pay back the loan within that period in fixed monthly installments. If, during that period, you require some additional funds, then you may find yourself in a quandary.

Angel Investors or venture capitalists might provide much-needed funds, but they come along with their own set of conditions. But on the other hand, business factoring will provide you the funds against invoices that have already been issued. Thus, if your invoice amounts are large, then the amount you receive will also be substantial. The beauty of business factoring is that it will grow along with the volume of your business. You do not have to worry about any monthly installments or penalties for late payments.

When You Want To Expand Your Business. You will require additional funds if you want to expand or cater to large orders. If you do not have ready funds then you could be financially crippled and end up frustrated. Business factoring can provide these funds and you could thus be able to cater to larger orders. You can also go in for bulk purchases that would further reduce your purchase costs, thereby leading to higher profit margins.

If you have a reputed credit client list and are supplying products maintaining good profit margin, then you could opt for this flexible financial option that has the ability to keep up with your increasing business needs. Thus, if you feel that the above factors are restricting your business, then go in for business factoring to improve your cash flow and expand your business.



For Commercial Finance Loans – Accounts Receivable Financing * Business Equipment Leasing * PO Finance * Commercial Property Mortgage – IMM Financial has been in the Commercial Finance Business serving companies just like yours for over 14 years. Put our experience to work for you. We are the Cashflow Specialists.