Stop Worrying About How to Get Funding for Outstanding Invoices
As a small-business owner, you can turn your unpaid customer invoices into fast cash with invoice factoring and its closely related counterpart, invoice financing. These options are best for business owners whose customers do not pay for goods or services right away but who need cash now to run their business.
Here is what you need to know about invoice factoring and invoice financing, plus some options on where to find financing.
Types of Receivable Financing:
Is a common variant invoice financing for small businesses in industries like clothing or manufacturing, where long accounts receivable is part of the normal business cycle. Factoring works by providing a cash advance based on the total value of the unpaid or outstanding invoices. You typically receive 50-80% of the invoice value upfront (also known as invoice discounting) based on the risk profile of your clients. You receive the remaining value once the client pays off the invoices, minus a factoring fee. This fee can be structured in any number of ways, but it generally nets out to be about 3-5% of the invoice value.
For small businesses is like factoring except that it is not a sale of your accounts receivable. Invoice financing works by using account receivables as collateral to get the advance and you are ultimately responsible for managing the customer relationships and collecting payment, including late payments. If your customer payments become delinquent, you will be responsible for the amount you advanced. The fees are usually 2-4% of your invoice value per month.
Receivable Based Line of Credit:
Is a credit line based on a percentage (usually of 80-85%) of the value of your outstanding invoices. The value is calculated based on the *aging* of the invoices. Namely, they give full value for current invoices and a discount for unpaid invoices. You will pay a prenegotiated interest rate based on your balance. When an invoice gets paid, your balance will be reduced. There is usually a fee when you draw the credit line. But this is usually a cheaper option than invoice factoring or invoice financing with APR less than 20%.
BitX Funding is one of the best options if you are thinking about factoring your outstanding invoices. BitX deep bench of lenders will provide funding up to 90% of the invoice in advance and 10% after clearing the invoices from your customers. BitX works with many lenders that can help you get cash against your outstanding invoices at a competitive rate.
BitX Funding is the online marketplace for small business owners looking to fund a project. We specialize in connecting small business owners with lenders who will compete for your business. We believe small business owners drive the economy and we are passionate about helping your company reach its full potential.
You can reach loans specialist by toll-free at 1-800-824-2407, or email at email@example.com or applying online here and we can guide you on which loans are the best fit for your business.