How Do Factoring Companies Work For Small Business

Most people are raised to believe that if something is too easy, it is probably too good to be true. While this may be the case in some instances, it is not true when it comes to the use of factoring companies to assist in providing short-term funding for small businesses.

The question of “How do factoring companies work?” is one we often hear at United Capital Funding. The answer is very simple, and our focus is on being transparent and explaining the process in full to our customers.

The Process Explained

To answer the question how do factoring companies work, let’s walk through a simple example of the process.

  1. Your company does work for another company and sends an invoice with 30, 60 or 90-day payment terms.
  2. You apply through our website for factoring, providing a certain amount of information.
  3. We approve your application within 24 hours
  4. You will submit the invoices you wish to factor; it is your choice which invoices you wish to sell.
  5. We will wire into your business account up to 80% of the invoice value.
  6. You can spend the money as you need to.
  7. We manage the accounts receivables we have factored, collecting payment and working as the back office for the account.
  8. When your customer pays us in full, we deduct our pre-set fee and refund you the balance from the 20% holding.

As a benefit to small businesses, factoring offers a very good solution to issues with cash flow options. With freedom to make a purchase, pay vendors, or take on new work and contracts, the business can grow.
Give our experienced factoring experts a call today at 877.894.8232. We can discuss your business and develop a factoring plan that will work for you.