Having trouble getting a loan for your business? Consider factoring your accounts receivable instead. Invoice factoring is a great and relatively inexpensive way to improve your cash flow and get the working capital your business needs. A factor works by providing a cash advance based on the total value of the invoices that you provide as collateral. You typically receive 80 percent of the invoice value upfront. Then you receive the remaining value once the client pays the factor, minus a factoring fee. This fee can be structured in any number of ways, but it generally nets out to be about three to five percent of the invoice value.

To qualify for invoice factoring, your company must satisfy two basic conditions. First, you should have no existing primary liens on your accounts receivable. Essentially, this means that no other company should have a claim on payments when they come in. This can make it difficult for companies in certain industries like construction to find a factoring company that will take their invoices.

Your customers must also be creditworthy. Factoring only works successfully if clients pay their invoices. Your company's creditworthiness will not necessarily factor into a decision to approve or deny your account. Instead, the factor will focus on evaluating your clients to determine whether and how quickly they will pay their invoices.

Every type of industry where commercial invoices are generated can, and does, utilize invoice factoring. According to the Commercial Finance Association, accounts receivable based financing currently exceeds $60 billion per year in the U.S. alone. Generally, if you have to pay for labor or materials prior to receiving payment from your customers, invoice factoring can help your business. If your business is growing faster than your ability to provide additional working capital, either from private sources or from a Bank, invoice factoring can probably provide the cash you need to maintain your growth. Also, business is fairly new and you are unable to qualify for additional financing from a Bank, invoice factoring may provide the solution to your cash needs.

Taking the invoice factoring plunge can be the difference between company survival and bankruptcy. In the end, using invoice factoring can buy time to eventually qualify for a regular credit line from your bank. We hope that you choose Sovereign Funding Group to be your guide.

Feel free to contact us anytime for a free no-risk consultation toll-free at (877) 836-4661 or email us if you have any questions.