Am I Approved to Start Factoring?

Is factoring right for me?

Will my business be approved for factoring?

These are just a a few questions that many business owners have. But before answering this question, it is important to know what exactly invoice factoring is.

What is factoring?

Factoring, also called accounts-receivable financing, is the process of selling your accounts receivables (invoices) to a third party at a discount.

A percentage of the total invoice amount is advanced to you within 24 hours. Rather than waiting for customer payment, accounts-receivable financing allows you to have the cash immediately to get caught up on bills, meet payroll or invest in new resources. Once the invoice is paid by the customer, the factoring company provides you the remaining balance of the invoice, less a fee for their services.

3 Questions to Qualify

Knowing business needs can answer the question of whether or not you need factoring. What does your business need?

Is my company business to business (B2B)?

If your answer is yes, that’s great. Scale Funding deals with companies that sell to other businesses.

If your answer is no, this is not the right business financing solution for you.

Do you invoice based on net terms?

The objective of accounts-receivable financing is to provide you with same-day funding rather than waiting for payment. If you invoice based on 30, 60 or even 90 day net terms, invoice factoring is a great solution for you. Instead of waiting the specified number of days to get paid (or more), your factor pays you right away.

Are you invoicing at least $50,000 per month?

To factor your receivables with Scale Funding, we require a minimum monthly volume of $50,000 per month. We also work with large companies that invoice up to $20 million per month. What’s more: our programs are flexible, including month-to-month contracts for those companies that have business that ebbs and flows.

3 Questions to Ask Yourself

Can you use the cash?

Any business can use cash, right? Whether it is to maintain daily operations, invest in new resources or hire new employees, cash is what keeps a business going. Take a look around. What do you need?

How long does it take you to get paid?

Do you feel like you’re waiting a long time after you complete the job to get paid? If so, our funding solution can eliminate this for you. Even if you are not dealing with slow-paying customers, you can use the enhanced cash flow to prepare for business growth.

Are you currently factoring?

If you’re currently with another company, but are thinking about switching factoring companies, this is not a problem. To make it easier for your new factoring company, be sure to let them know upfront that you are currently factoring. They’ll want to know information about who your current factor is and your contract expiration date. It’s also important to know how much of your receivables have been purchased by your current factor that are yet to be paid. Your new factoring company will need to purchase these from them as you can only use one factoring company at a time.

Learn More

Download the Definitive Guide to Factoring to learn more about how it can help improve your cash flow. If you have additional questions or want to improve your cash flow today, contact a financial representative at Scale Funding.