Accounts Receivable Factoring

Factoring accounts receivable is a common method of export financing that provides exporters with liquidity by factoring or selling their accounts receivable. The accounts receivable are sold at a discount but they are also sold without recourse. Factoring accounts receivable is an ideal solution for companies that need extra cash for inventory, payroll or marketing because it creates an immediate influx of cash from the invoices already on your books. Companies can access quick cash from their invoices to start their next project. Factoring accounts receivable can be utilized as needed or on a continuing basis. Factoring accounts receivable provides companies the ability to offer terms to international customers but still receive cash when the goods are delivered.

Traditional factoring is an ideal solution for companies that need extra cash flow to purchase inventory, cover payroll or invest in marketing. You are able to create an immediate influx of cash based on the invoices already on your books. The finance provider, known as the factor purchases all of your accounts receivables and advances you 70% to 90% of the total amount within 24 to 48 hours. The factor pays you the remainder of what you’re owed once your client pays the factor, usually 30 to 45 days later. It deducts a small fee, based on the size and age of each invoice.

Accounts Receivable Factoring, which is known by several names, is commonly called accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing, although accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable.

Accounts Receivable Factoring is a financial transaction that is a common method of trade finance that provides immediate liquidity to companies that sell their accounts receivable at a discount. Although the discount in the face value of the accounts receivable is a cost, companies benefit in converting their accounts receivable to immediate cash, and their accounts receivable are typically sold without recourse.

Factoring is often an ideal solution for companies that need extra cash for inventory, payroll or marketing because it provides immediate cash based solely on invoices already on their books, so it requires no borrowing. Companies can access quick cash from their invoices to start their next project. Accounts Receivable Factoring can be utilized as needed or on a continuing basis.

In the world of global trade finance, Accounts Receivable Factoring can be a tremendous advantage to companies who use factoring as a trade funding method to put themselves in a position to offer credit terms to international customers in export finance transactions while still receiving cash when the goods they are exporting are shipped. The offering of credit terms to customers can be a tremendous competitive advantage.

Traditional Accounts Receivable Factoring is an ideal solution for companies that need extra cash flow to purchase inventory, cover payroll, invest in marketing, or virtually any use of immediate liquidity. Companies that factor their accounts receivable create an immediate influx of cash based entirely on invoices which are already on their books. In a typical Accounts Receivable Factoring transaction, the finance provider, who is known as the factor, purchases the accounts receivables and advances 70% to 90% of the total amount to the company in 24 to 48 hours. The factor then pays the remainder of what is owed to the company once the client pays the factor for the outstanding invoices, which is usually 30 to 45 days later.

Factoring is not the same as invoice discounting which is called an “Assignment of Accounts Receivable” in American accounting, as propagated by FASB within GAAP. Factoring is the sale of receivables, whereas invoice discounting (technically “assignment of accounts receivable” in American accounting) is borrowing that involves the use of the accounts receivable assets as collateral for the loan.

Factoring accounts receivable is a common method of export financing that provides exporters with liquidity by factoring or selling their accounts receivable. The accounts receivable are sold at a discount but they are also sold without recourse. Factoring accounts receivable is an ideal solution for companies that need extra cash for inventory, payroll or marketing because it creates an immediate influx of cash from the invoices already on your books. Companies can access quick cash from their invoices to start their next project. Factoring accounts receivable can be utilized as needed or on a continuing basis. Factoring accounts receivable provides companies the ability to offer terms to international customers but still receive cash when the goods are delivered.

Traditional factoring is an ideal solution for companies that need extra cash flow to purchase inventory, cover payroll or invest in marketing. You are able to create an immediate influx of cash based on the invoices already on your books. The finance provider, known as the factor purchases all of your accounts receivables and advances you 70% to 90% of the total amount within 24 to 48 hours. The factor pays you the remainder of what you’re owed once your client pays the factor, usually 30 to 45 days later. It deducts a small fee, based on the size and age of each invoice.

Accounts Receivable Factoring, which is known by several names, is commonly called accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing, although accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable.

Accounts Receivable Factoring is a financial transaction that is a common method of trade finance that provides immediate liquidity to companies that sell their accounts receivable at a discount. Although the discount in the face value of the accounts receivable is a cost, companies benefit in converting their accounts receivable to immediate cash, and their accounts receivable are typically sold without recourse.

Factoring is often an ideal solution for companies that need extra cash for inventory, payroll or marketing because it provides immediate cash based solely on invoices already on their books, so it requires no borrowing. Companies can access quick cash from their invoices to start their next project. Accounts Receivable Factoring can be utilized as needed or on a continuing basis.

In the world of global trade finance, Accounts Receivable Factoring can be a tremendous advantage to companies who use factoring as a trade funding method to put themselves in a position to offer credit terms to international customers in export finance transactions while still receiving cash when the goods they are exporting are shipped. The offering of credit terms to customers can be a tremendous competitive advantage.

Traditional Accounts Receivable Factoring is an ideal solution for companies that need extra cash flow to purchase inventory, cover payroll, invest in marketing, or virtually any use of immediate liquidity. Companies that factor their accounts receivable create an immediate influx of cash based entirely on invoices which are already on their books. In a typical Accounts Receivable Factoring transaction, the finance provider, who is known as the factor, purchases the accounts receivables and advances 70% to 90% of the total amount to the company in 24 to 48 hours. The factor then pays the remainder of what is owed to the company once the client pays the factor for the outstanding invoices, which is usually 30 to 45 days later.

Factoring is not the same as invoice discounting which is called an “Assignment of Accounts Receivable” in American accounting, as propagated by FASB within GAAP. Factoring is the sale of receivables, whereas invoice discounting (technically “assignment of accounts receivable” in American accounting) is borrowing that involves the use of the accounts receivable assets as collateral for the loan.

A factor is a financial intermediary that purchases receivables from a company. The factor is essentially a financier and funding source that agrees to pay the company the value of their invoices less a discount for commission and fees. The factor advances most of the invoiced amount to the company immediately, with the balance paid upon receipt of funds from the invoiced party.

Factoring helps a business to obtain immediate capital based on the future income attributed to a particular amount due on an account receivable or business invoice. Accounts receivable function as a record of the credit extended to another party where payment is still due. Factoring allows other interested parties to purchase the funds due at a discounted price in exchange for providing cash up front.

The terms and conditions set forth by a factor may vary depending on their own internal practices. Most commonly, accounts receivable factoring is performed by third-party financiers who are known as factors. Factors often release funds associated with newly purchased accounts receivable within 24 hours. Repayment terms can vary in length depending on the amount involved.

Additionally, the percentage of funds provided for the particular account receivables, referred to as the advance rate, can also vary. Accounts receivable factoring is not considered a loan because the parties don’t issue or acquire debt as part of the transaction. The funds provided to the company in exchange for the accounts receivable is also not subject to any restrictions regarding use.

A factor is a financial intermediary that purchases receivables from a company. A factor is essentially a funding source that agrees to pay the company the value of the invoice less a discount for commission and fees. The factor advances most of the invoiced amount to the company immediately and the balance upon receipt of funds from the invoiced party.

A factor allows a business to obtain immediate capital based on the future income attributed to a particular amount due on an account receivable or business invoice. Accounts receivable function as a record of the credit extended to another party where payment is still due. Factoring allows other interested parties to purchase the funds due at a discounted price in exchange for providing cash up front.

The terms and conditions set forth by a factor may vary depending on their own internal practices. Most commonly, factoring is performed through third party financial institutions, referred to as factors. Factors often release funds associated with newly purchased accounts receivable within 24 hours. Repayment terms can vary in length depending on the amount involved. Additionally, the percentage of funds provided for the particular account receivables, referred to as the advance rate, can also vary.

Factoring is not considered a loan because the parties don’t issue or acquire debt as part of the transaction. The funds provided to the company in exchange for the accounts receivable is also not subject to any restrictions regarding use.