And, because factoring is a financial transaction between you and a third party, you can record it for your end-of-year tax deductions. When the invoice factoring company collects your customer’s payment, you receive the remainder of the invoice amount minus a nominal factor fee known as the factoring rate. There are no hidden fees. There’s no waiting for outstanding invoices to be paid, and you don’t take on debt like you would with a traditional business loan. If you’re a Viva client, you may qualify for advances of up to 98 percent.
Whereas you might normally wait 30, 60, or even 90 or more days for customers to pay their invoice, with factoring, an invoice factoring company purchases the invoice from you and typically gives you 70 to 90 percent of the total value upfront. Factoring allows you to skip the wait for payments from your B2B customers. How Does Factoring Work?Īlso referred to as accounts receivables factoring or accounts receivable financing, business receivables factoring, or sometimes even invoice financing, invoice factoring involves selling your unpaid customer invoices (accounts receivable) to a factoring company, who will then pay you a percentage of the total invoice value (minus a discount rate known as a factoring fee). On this page, we’ll go over some of the benefits of invoice factoring and how it works, so it’s easier to see if it’s the right way for your small business to level up.
#SMALL BUSINESS INVOICE FACTORING FULL#
Small business invoice factoring is an ideal form of financing for startups and small businesses that haven’t reached their full potential yet it helps organizations grow stronger. Invoice factoring is unlike any other business finance solution.
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