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The Factoring Process

Factoring is a simple extension of your current accounts receivable process.

  1. Following your normal course of business, you sell your product or service to a customer, and issue an invoice for the value of the goods or service.
  2. To factor the invoice, you follow the sale by sending the factor a copy of the invoice.
  3. The factor processes the invoice, and within 24-28 hours, the factor gives you a percentage of the invoice amount, called an advance payment. This is the first of two payments you receive when factoring an invoice.
  4. The customer, when ready to make payment, directs payment to the factor.
  5. When payment is received, the factor withholds a small factoring service fee, and returns the difference, or reserve back to you.
  6. The reserve is the second payment you receive from the factor for the invoice.
Factoring Flow Diagram <  Previous Next  >
Factoring Means More Capital for Your Venture!