What is Accounts Receivable Factoring?
Accounts receivable factoring, or accounts receivable financing is also known in the business world as invoice factoring or invoice financing, is a method of acquiring funds for business owners that give the company the ability to quickly turn assets and invoices into working capital (i.e. cash). Instead of waiting an extended period of time, in some cases weeks or months, accounts receivable factoring helps business owners get an advance on those invoices (or accounts receivable) immediately - with Porter Capital funds can be available in as little as 2-3 business days - and use the cash for important or time-sensitive business needs. In many cases, where business have long net terms for paying invoices but ongoing operational expenses, accounts receivable financing is the perfect solution.
How Accounts Receivable Factoring Works?
Factoring is one of many forms of financing that is available after your business provides goods or services to creditworthy customers, either in form of B2B products or invoices that allow you to apply for accounts receivable factoring or invoice financing. Once your business or company completes the application process and is approved for factoring with Porter Capital you would follow the easy steps below:
Your business invoices a B2B customer and then sends Porter Capital a copy
Porter Capital provides the needed cash-flow to your business at the time of receipt
Over time you are made available a larger line of credit, as needed, to run your business and day to day operations
Factoring Example: An IT Staffing Company (ABC Staffing) signs a long-term deal with a large computer company to provide outsourced IT staffing on a monthly basis but the computer company only pays the contract invoices NET 90, or 90 days after the invoice is submitted by the staffing company. ABC Staffing has to pay the contractors it is hiring to work at the large computer company sooner than 90 days so they need liquid capital, or cash, to keep up the operating expenses of doing business; in this case ABC Staffing would be a fantastic fit for invoice (accounts receivable) factoring as Porter Capital could help keep their employees paid on time.
Benefits of Accounts Receivable Factoring
We have talked in length about the benefits of invoice factoring or accounts receivable factoring but the simple answer to the question of how accounts receivable factoring can help your business is that it provides your company an opportunity to continue doing business when no other traditional forms of financing or loans are available to you. In many cases factoring can help young businesses build, or rebuild, a positive business and personal credit history. Factoring can also help survive a slow period in business or in some cases a month to month downturn cycle or lawsuit as traditional finance and banking companies are more restrictive in their lending practices, usually resulting in your business being denied a traditional loan or line of credit; this is where Porter Capital can help. As a top-rated and reviewed factoring provider Porter Capital can continue to stand strong during these tough times and provide a reliable source of capital (or cash) to your business until things pick up again.
Accounts Receivable Summary and Next Steps
Now that you have decided to move forward with accounts receivable factoring, also known as accounts receivable financing, it's time to make sure you choose the right factoring company. In many cases this is the most-important decision a business can make so we want to make sure that we can help steer you in the right direction. Our financial representatives are available to help maneuver you or your Chief Financial Officer through the confusing and sometimes scary world of accounts receivable factoring, contact us now to learn how Porter Capital can get your company funded in as little as 24 hours with a line of credit up to $15,000,000.