What Is Factoring
Factoring is a financial tool used by businesses that combines working capital financing, credit analysis of your customers, accounts receivable bookkeeping, credit protection, and collection services. Factoring lets you convert your invoices immediately into cash that can be used today to meet payroll and other expenses. Additionally, factoring gives businesses the power to ensure growth without selling dilutive equity or incurring debt. CapFlow Funding provides factoring services to small and medium-sized businesses nationwide.
How Does Factoring Work?
Our clients enjoy the benefits of immediate funding, as opposed to waiting up to 90 days for payment from your customer (called an "account debtor"). Once a client is approved, factoring with CapFlow Funding is fast and simple. Clients send a schedule of invoices they wish to sell when capital is needed. Upon receipt of the schedule, CapFlow Funding will verify the invoices and purchase them by remitting 75 - 90% of the total amount within 24 hours. The unfunded portion of the invoice amount is called the "reserve." Once the invoice is collected from the account debtor in CapFlow's lock box, the reserve amount (less our factoring fee) will be returned to our client.
The Factoring Process:
- Undertake due diligence centered on reviewing your customer list and A/R payment history
- Documenting the transaction through a Master Factoring Agreement which details all terms and conditions
- Working with your company to ensure all new invoices show the payee to be CapFlow Funding
- Verifying the delivery of products or services on large invoices with your customers
- Pay your company an immediate advance within 24 hours of invoice presentation
- Collect the full invoice amount from your customer in our lockbox
- Once an invoice has been paid, remit the balance, less fees, to you