In the world of business financing, factoring has emerged as a popular option for companies seeking to improve cash flow and address working capital challenges. Factoring involves selling accounts receivables to a third-party (known as a factor) at a discount, allowing businesses to receive immediate funds instead of waiting for their customers to pay their invoices. However, not all factoring … Read More
Can I Factor My Past Due Invoices?
Most factors will purchase invoices that are slightly past due. If you have net 30 payment terms a factor may be willing to purchase an invoice that is 40-45 days old. The factoring company would need to verify that the invoice has not been paid yet. If your invoice is significantly past due, for example, 80-90 days it is then … Read More
Will You be Bugging My Customer?
American Funding will never bother your customer. We try to stay behind the scenes and allow you to maintain the relationship with your customer. We do what we call “soft collections” for our clients. We will reach out via email at 45 days if the invoice hasn’t been paid. We ask if Accounts Payable has the invoice in their system … Read More
Will My Customer Need to Complete a Credit Application?
Your customer will not need to complete a credit application. Instead, American Funding will pull a No soft credit inquiry on your potential new customer using a commercial credit reporting agency. We just need the business name and address to pull a commercial credit report. This type of inquiry does not affect your customer’s credit score or show as an … Read More
Is Factoring Expensive?
Factoring Your Receivables is an excellent way to increase your cash flow, but how much does it really cost? Typically, if you have net 30 terms with your client you will pay between 2-5 percent. Most factoring companies charge 1% of the total invoice every 7-10 days. For example, if your invoice is $1,000 and goes out 38 days on … Read More
Will I Build my Business Credit by Factoring?
Managing cash flow while building a strong business credit profile is essential for long-term growth. In this article, we’ll delve into the strategic benefits of invoice factoring that not only boosts your cash flow but also contributes to improving your business credit. By understanding the nuances of factoring, you can navigate the financial landscape more effectively and lay the groundwork … Read More
What is PO Funding? How is it Different than Invoice Factoring?
Purchase order financing (PO funding) helps businesses fulfill product orders. If sales outpace your incoming cash flow, then purchase order financing might be a good fit to fulfill your customer order. Funding is sent directly to your vendor to purchase the product. Once the product is shipped to your customer, an invoice is created and then factored to pay-off the … Read More
What is a Notice of Assignment?
In the world of factoring, a Notice of Assignment plays a crucial role. It’s a formal communication that a factor sends to a chosen customer, informing them that their receivable has been assigned. This means that all future payments should be directed to the factor until the assignment is officially released. But there’s more to the Notice of Assignment than … Read More
What if My Customer is Also a Small Business?
A large part of your ability to fund invoices with a factor will hinge on the creditworthiness or your customers. Just because your customer is also a small business does not mean that they will not credit qualify. Many small businesses have been around for years and have great payment history. Providing their information to your account manager for a … Read More
What is the Difference Between an MCA and Invoice Factoring?
When it comes to financing options, managing risk is a critical consideration for businesses. Invoice factoring and Merchant Cash Advances (MCAs) are two popular alternatives, each with its own set of advantages and risks. In this article, we will explore the differences between these two options and shed light on how invoice factoring can be a more secure and cost-effective … Read More