Factoring.

Factoring converts invoices into cash by selling them to a facility at a discount. It funds growth for businesses whose customers pay in 30 to 90 days, and it is underwritten on your customers' credit more than on yours.

How the process runs

1. Facility setup. Receivable aging and sample invoices reviewed, customer credit checked, facility documents executed. Commonly 3 to 10 days.
2. Funding per invoice. Submit invoices, receive the advance, typically within 24 to 48 hours.
3. Reserve release. When the customer pays, the reserve is released less the fee.

Typical terms in the market

Advance rates commonly run 70 to 90 percent of invoice face, with fees commonly 1 to 3 percent per 30 days outstanding. Facilities are recourse or non recourse, notification or non notification, and those 2 choices change both price and customer experience, so they are decided deliberately, not defaulted into.

Documents you will need

1. Accounts receivable and payable agings.
2. Sample invoices and supporting delivery or acceptance documentation.
3. Customer list with concentrations.
4. Articles of organization and standard entity documents.

What factors look for

The credit quality of your customers, concentration in any single account, dilution history from credits and disputes, and whether invoices verify cleanly. Strong customers with clean verification buy you better advance rates than your own balance sheet ever could.