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How Factoring Works... EXAMPLE: You have delivered a product or service to a customer. You issue an invoice to your customer. Typically you wait 30, 60, 90 days for payment. With factoring, the factor immediately purchases the invoice, and advances between 60-80% of the invoiced amount to you. It is wire transferred into your bank account. When your customer pays the invoice, they pay the factor, because they have already advanced money to you. When the invoice is paid to the factor, you receive the remaining balance less the factor's fee or cost of the money. Before you ever enter into the relationship of Domestic factoring and Construction factoring, the factor talks with you, and you are issued a Rate Sheet. This shows the amount you will be paying for the use of their money. One of the most important features of Domestic factoring and Construction factoring is that it produces immediate cash payments to a company at the time of shipment, or delivery and invoicing of the customer. It has been used in America since Colonial times, and it has been used worldwide for thousands of years. You can now plan you jobs, and take on more contracts without a cash flow crunch. Factoring is not considered a debt on your balance sheet. Therefore, Domestic factoring and Construction factoring builds equity, provides customer credit checks, allows company growth, and reduces bad debt. |
