6 Advantages of Factoring Receivables

Factoring involves selling some or all of your monthly invoices to an alternative lender for the purpose of receiving immediate cash for them, so you don’t have to wait for customers to pay on those invoices. Apart from the obvious immediate cash benefit, here are some other advantages of factoring.

No collateral necessary

There is no collateral necessary in factoring because the invoices themselves serve as collateral in the transaction. Since they represent unpaid income, there is no need to ask for additional surety from the business selling the invoices.

High cash advance

When arranging for factoring, a business will typically get around 80% of the face value of the invoices as a cash advance. After the alternative lender has collected the amount of those invoices from your customers, your business would then receive the remaining 20% of the invoice value, after a factoring fee has been subtracted out.

Perfect for growth

Many companies are obliged to wait for the payment of their invoices before they can take on any new initiatives, or work toward achieving growth. When you have money available through factoring, you no longer have to wait for invoices to be paid, and you can proceed with whatever business initiatives you have in mind.

Big time-saver

Any business which arranges for factoring, will save a great deal of time in receiving their money, as well as in other administrative work connected to the invoices. For instance, it won’t be necessary to review invoices or to send out a steady stream of collection notices in order to get paid.

Collection is easier

Because the factoring company is responsible for the collection of invoices once they’ve been purchased, there is no need for the original business to engage in collections practices. That means company personnel can be devoted to more important tasks, such as undertaking the core processes of the business.

No debt is incurred

Since no money has been borrowed in a factoring transaction, there is never any debt incurred by the business. There’s never any money to pay back to a factoring company, and there’s never any danger of losing a piece of your business.

Factoring with Commercial Capital Lending

Factoring is a financial approach which can provide many businesses with much better cash flow, and it may be very helpful to your business as well. Contact us at Commercial Capital Lending to see if factoring will work for your company, to provide you with needed funding.


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