Q: Do I need to provide collateral?
A: You do NOT need to provide collateral to factor your invoices. Accounts Receivable Factors buy invoices on completed work, so in a sense, your work is the collateral.
AR Factoring allows you to use your invoices to provide immediate funding. It can solve most cash flow problems related to slow-paying customers and help you to grow your business. The line of credit provided is based on your customer’s credit worthiness. The line of credit can increase as your business grows.
Factoring receivables can provide a fast source of cash without taking on more debt or providing collateral. To qualify, you must have clients with good credit and that can pay your invoices in 30-90 days. Secondly, your invoices must not be pledged as collateral to another business or institution such as a bank.