Various Advantages Of Factoring The Invoices

In any business, there will be a payment terms with the client. Normally it varies from 0 days to 90 days or higher. When your business size is small and invoice value is less, it will not be big problem to wait till the payment period. But when the invoice value is very high and payment term is 90 days or above, you and business will be in trouble till the payment arrives. You will be also need to pay the vendors who send you the raw materials and you will be have loans for which you need to pay the monthly installment. This is the scenario in which you can make use of the invoice factoring. For this very purpose you can know what is factoring company?

How to approach them

Once you decided to have the invoice factored with them, you can visit their website and fill out the enquiry form and submit there. Once their executives received the details, they will go through you and your company profile, and then they will contact you. You can choose any of the contract type available with them. They have various contract types and it varies with the percentage of service charge for each type and terms and conditions also will differ based on what type of contract you choose.  Executives will explain all the details regarding each contract. Once everything is done, you can send the invoice to them. They will screen your client for the credit score, their credit worthiness and other details and will then proceed for approval. Normally, it takes maximum 2 or 3 working days from the day you send the invoice. Once they are satisfied with the client profile, they will accept and wire the advance amount. It varies from 50% to 75% based on your client’s credit score.  Balance amount will be settled to you once the client pays them full amount. They will take their service charge and then will transfer the rest to your account. This is how the entire process works. With the invoice factoring, you will be getting the due amount in advance and you won’t incur any debts. Only time you may land in trouble is when your client does not pay the amount on time. In that case you need to purchase back the invoice from the factoring company or have to oblige the conditions as per the contract signed.

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