An Accounts Receivable Factoring Example In A Real World Scenario

It can be difficult to imagine how a theoretical option can work in a real-world business. To help our customers with a real world accounts receivable factoring example, let’s work through a likely scenario not far from what your business may experience.

The Problem with Invoicing

Company A has done work for Company B that includes both materials and labor. Company A invoices Company B for the work with net 60-day terms as they agreed prior to starting the job.

This leaves Company A with not enough income from that contract to replenish inventory, make payroll and pay business expenses. As a result, Company A is limited on taking new contracts because of lack of inventory and materials.

The Solution in this Accounts Receivable Factoring Example

To solve this dilemma, Company A contacts United Capital Funding and submits an application for factoring. We process the application in 24 hours and the Company provides us with the $100,000 accounts receivable for the job.

We provide at least 80% or $80,000 to Company A in just days. This gives the business the opportunity to purchase merchandise and inventory, make payroll and take on new business.

At the same time, United Capital Funding will then work directly with Company B to collect the invoice on the terms you have set. Once it is paid in full we deduct our fees from the 20% or in this case the $20,000 withheld, wiring you the balance once the account is closed.

To apply for factoring or to see how this accounts receivable factoring example would work for your business, call us today at 877.894.8232.