Cash flow shortages can happen to almost any business, but invoice factoring can provide a quick, easy solution. Invoice factoring involves the selling of your account receivables or invoices to secure immediate working capital.
Dealing with this volume in a manual operation was causing several problems. Invoice processing was extremely paper intensive; a considerable amount of time and effort was spent data inputting, chasing paper invoices and filing. It was often difficult to locate invoices and the AP team would waste time contacting the business users to trace invoices. This resulted in a lack of efficiency and a lack of control over the process. There had also been an issue of making a number of duplicate payments.
Another significant benefit of invoice factoring is the professional debt collection service provided by the factoring company. The factoring company is equipped to handle debt collections professionally and efficiently, leaving your staff to focus on core activities such as creating more sales. In addition, this will reduce your costs associated with processing invoices and handling collections costs. How Invoice Factoring Works Invoice factoring is a transaction in which you sell outstanding invoices for immediate cash, instead of waiting the typical 30 days for the invoices to be paid. You receive an up_front, lump_sum payment for your invoices that's slightly less than face value. The advance payment which can be provided within as little as 24 hours is typically 70 to 90 percent of the total invoice value.