Factoring enables businesses to convert their assets into liquid cash, facilitating the successful completion of their immediate cash needs.
There are various kinds of factoring, with each having its benefits and procedures, all depending on the needs of the business.
Business Factors and Finance has over forty years of financing business receivables, helping several businesses resolve their cash flow issues.
The business factors process gets done quickly and simply to give businesses quick cash within the shortest time possible.
Different industries require factoring in various ways, which include:
1. Oil And Gas Financing
Oil and gas factoring is a highlighted process that occurs in four steps and keeps the businesses afloat with the required cash. The first business factors step involves the oil and gas company providing the factor with a copy of the invoice sent to the client.
The next step involves the verification of the invoice by the factor which runs the clients’ credit check. After which, the factor advances a portion of the invoice outstanding amount to the oil and gas company, and once the invoice gets paid, the factor submits the remaining amount to the oil and gas company.
The balance that gets sent is less the discount and additional fees at the cost of the factoring.
2. Freight Factoring
Freight bill factoring is when a company sells its outstanding invoice accompanied by the bills of lading to a factoring company for cash. The invoices get converted into cash in several cases within twenty-four to forty-eight hours, which makes the process quite reliable and efficient.
The businesses that qualify for freight factoring include; large transportation fleets, owner-operators, freight brokers, dump truck hauliers, automobile transporters and more. Some of the business factors’ advantages are that the freight company receives up to 96% of the invoice face amount with no upfront fees and simple credit qualifications.
3. Telecom, Wi-fi And Cable Financing
Telecom, Wi-Fi and cable financing enables the telecom contractors to increase their revenue and have working capital to finance new projects. The contractors rely on asset-based lending and business factors, among other alternatives.
The factoring company assumes the responsibility to collect the invoice payment on behalf of the business with the probability of buying a few invoices, which gets known as spot factoring and an alternative to purchasing all of them.
The fees charged for the factoring depend on the type of arrangement, the customer’s credit profile, the invoices being factored in, and the dollar amount.
4. Information Technology Financing
Supply chain financing holds the potential to come with restrictions which harm an IT supplier’s business. Business factors work with high-tech consulting, manufacturing, customer support and manufacturing, enabling IT businesses to take out credit facilities that are asset or revenue-based.
The factoring works perfectly for the start-up as long as their customers are creditworthy. The process requires no assets, thereby working for businesses that have pledged their assets to a lender, making it a good way to fund expenses such as engineers and developers’ payroll, amongst other high-income earners.