Invoice factoring, also known as accounts receivable factoring, is the sale of accounts receivable invoices for immediate cash. Invoice factoring is used by some of the most successful and stable business across the United States. Invoice factoring allows businesses to capitalize on existing sales by avoiding the traditional 30-120 day payment window and stabilizing their cash flow.
How Does Invoice Factoring Work?
1. You determine the invoices you wish to factor.
2. Once approved we pay you 70 to 90% of the total cash value of the total factored invoices
3. We collect on those invoices and once all payments have been collected we pay you the remaining
balance minus a small service fee of 2-5%
4. Many business use invoice factoring on an ongoing basis, finding that the 2-5% fee is easily offset
by increased operating capital and the convenience of eliminating the 30-120 day payment cycle
Why Businesses use Invoice Factoring Services
Although the reasons vary from business to business and industry to industry most of our clients find that invoice factoring helps them stabilize their cash flow, making them more efficient and allowing them to be more responsive to market opportunities.
Common reasons are:
Be able to extend new customers credit terms
Keep accounts payable current
Take advantage of supplier discounts
Marketing and promotion
American Capital Services does not limit or restrict how you use the moneys received when you factor invoices with us.
Who Can Take Advantage of Invoice Factoring?
Businesses of all sizes use invoice factoring services, from large fortune 500 companies to small start-ups. There is no limitation on the type or size of company that can take advantage of invoice factoring.
"I built my fortune 500 company using invoice factoring. We were growing too fast, and without the financial tool of factoring we would have failed from lack of cash flow. I strongly recommend factoring as a tool for growth"
"We added a new division. Instead of fronting the cash, or taking a bank loan, we decided to use factoring to grow sales. ACS showed us how to expand our business without taking on debt with a line of credit from a bank."