Accounts receivable (AR) factoring, also known as invoice factoring, is a financing solution that allows businesses to unlock cash tied up in unpaid invoices. At Owens Capital, we offer accounts receivable factoring with flexible terms and tailored financial solutions. Here’s what you need to know about our accounts receivable factoring terms:

1. Financing Structure:

• Accounts receivable factoring involves selling your unpaid invoices to a factoring company at a discount. The factoring company advances a percentage (typically 70% to 90%) of the invoice value upfront.

2. Advance Rate:

• The advance rate is the percentage of the invoice amount that the factoring company advances to your business. This rate is determined based on factors such as the creditworthiness of your customers, the industry, and the invoice aging.

3. Discount or Factoring Fee:

• Factoring companies charge a fee, often referred to as a discount fee, for their services. This fee is deducted from the remaining invoice amount after the customer pays in full. It typically ranges from 1% to 5% of the invoice value per month.

4. Collection and Management:

• The factoring company takes over the responsibility of collecting payments from your customers. They manage the accounts receivable ledger and handle the collection process, saving you time and resources.

5. Use of Funds:

• Funds obtained through accounts receivable factoring can be used for various business purposes, including:

  • Working Capital: Funding day-to-day operations, payroll, and supplier payments.

  • Expansion: Investing in growth opportunities, purchasing inventory, or hiring additional staff.

  • Debt Management: Paying off existing debts or improving cash flow management.

6. Repayment Structure:

• Repayment to the factoring company occurs when your customers pay their invoices in full. Once the payment is received, the factoring company deducts their fees and remits the remaining balance (reserve amount) to your business.

7. Eligibility Criteria:

• Eligibility for accounts receivable factoring is based primarily on the creditworthiness of your customers and the quality of your invoices. Factors such as invoice aging and industry type may also influence eligibility.

8. Application Process:

• Applying for accounts receivable factoring involves submitting an application, providing details of your outstanding invoices, and undergoing a credit evaluation. Our factoring specialists work closely with you to expedite the approval process.

9. Benefits of Accounts Receivable Factoring:

• Immediate Cash Flow: Access to cash within days instead of waiting for customers to pay.

• Flexible Financing: Funding grows with your sales volume, providing scalable financing solutions.

• Credit Protection: Factoring companies may offer credit insurance on your receivables, protecting against customer defaults.

Get Started Today

Ready to explore accounts receivable factoring options for your business? Contact us today to discuss your financing needs and discover how our accounts receivable factoring terms can improve your cash flow and support business growth.