Invoice factoring is a great way to access alternative sources of fund. The process is quite simple and it ensures that your business can be kept running even when you cannot qualify for a bank loan. The benefits are a lot especially for small scale businesses. Most people engage them when they need fast cash in small amounts to finance immediate business requirements.

It is a flexible engagement as the factoring is done based on the size or value of your invoices. The factoring company is flexible such that they advance the loan immediately when you provide the invoices for them. It can also be for a period of your choice such as three weeks or 2 weeks.

They are also fast. Most bank loans will take a lot of days before all the paper work is done. After this one has to wait for the bank to approve their loan. All these is minimized in case of invoice factoring as it may take approximately 3-4 business days depending on the company that one is dealing with.

How to qualify;
Qualification is pretty easy in this case. Most factors do not look at credit scores or the end of years revenues of the business. Most of them will dwell on these three things.

  1. Your invoices should be to businesses or the government. They should also have good credit scores. It is also advisable that the businesses not be new. It is hard to determine the credit scores of a new business or even their lifespan. Invoices to individuals are not mainly considered as there is risk of acquiring bad debt.
  2. The invoices need to be payable within a period of 90 days. The invoice should also not be encumbered in another debt. One invoice cannot be used as collateral for two loans.
  3. It is also important to check your tax and legal issues. The business should not have a problem of legalities or even tax issues such as tax evasion. This is because it would render the invoice useless as collateral to the invoice factoring company.
    As long as one’s business is in order, the factoring company will be able to accept the loan request and also advance it to you. The opportunity should however not be used without aim just because qualification is easy. This is so because it could eventually affect your business credibility.

Are you ready to unlock revenue tied up in unpaid invoices?

Not yet – I’d like to find out a bit more about Invoice Factoring.