A factoring company purchases outstanding invoices to give businesses instant access to the cash tied up in their outstanding accounts receivable. This gives a business access up to 95% of their outstanding AR right away. When the client pays the invoice, the factoring client pays a small fee of generally 1-3% of the invoice value for the service and gets the remaining reserve amount at that time. In short, factoring service companies help businesses improve cash flow.
Invoice factoring services aid many different types of companies with their cash flow issues. B2B or B2G companies in industries like temporary or contract staffing, manufacturing, trucking, oil & gas, distribution, delivery and many others, all use factoring to get the cash they need and grow and maintain a healthy business.
To enroll with a factoring service company a business will need to go through a basic application process. This will give the factoring company a good idea of what you do, if your business has some going concern,” and if the invoices the factoring company will be purchasing are in fact good and will be paid.
Once you have submitted an application, a factoring company will provide you with a basic set of terms and a contract for your review. After that is agreed upon and signed, it will be a matter of sending in invoices and any backup documentation to substantiate those invoices. Then the factoring company will do their notification and verification for those invoices.
Meritus Capital has been in the business for almost 20 years and has provided billions in funding to growing companies across the U.S and Canada. At Meritus Capital, we have developed the following to make the process as painless as possible:
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