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Factoring Companies - All About Factoring Services

Factoring companies provide financing to small and mid-size businesses in need of steady cash flow. Picking the right factoring company is a challenge, especially with so many to choose from. When evaluating factoring companies and their services, it’s essential to understand the process of factoring.

What Is Invoice Factoring?

Factoring companies pay immediate cash for invoices.Invoice factoring is the process of selling open invoices to a factoring company in exchange for an immediate cash advance. The Factor takes ownership of the client’s invoices and receives payment from their customer. Once payment is received, the remaining invoice balance is remitted to the client, less a small factoring fee.

Why Use a Factoring Companies Services?

Businesses use factoring when they have an immediate need for cash. When providing work or services on net 15, net 30, or longer terms, waiting on customer payments interferes with meeting payroll, managing expenses, or pursuing new opportunities.

Factoring companies are an excellent source of financing for businesses needing fast funding. Setting up an account is not as time-consuming or complicated as a bank loan. Plus factoring does not add debt to a company’s balance sheet.

Factoring Lines From $50K – $20 MM

How Factoring Companies Qualify Clients

Factoring companies provide fast funding to small and mid-size companies.Applying for and receiving approval on a bank loan application takes a long time. Factoring companies do not have as strict qualifications as banks.  Where banks will base their decision on the credit history and financial ability of the potential client, approvals for factoring are based on the credit and payment history of the client’s customers.

Factoring companies serve clients with limited credit histories or those that have struggled financially. Start-up businesses, companies turned down by banks, and those with limited bank lines of credit use factoring to build financially stable organizations.

How to Choose a Factoring Company

Factors all provide cash to the clients. What separates one from another are the advances, rates, contracts, and services each offer. When choosing a factoring company here are some considerations to keep in mind.

  • Industry Experience: Make sure the Factor has a record of serving other businesses in your industry.
  • Advance Rate: Advance rates range from 80% to 90% depending on the industry and payment terms.
  • Factoring Fees: This is the cost of factoring. Monthly volume, payment terms, and length of contract are used to determine factoring fees.
  • Contract Length: Factors offer contracts for month-to-month funding or longer-term agreements. Select the type of deal that fits your long-term needs.
  • Additional Services: Some Factors provide other services to clients including credit review of potential customers, AR management, online reporting, and more.

TCI Business Capital – The Right Factoring Company

Since 1994 TCI Business Capital has served companies with factoring programs customized to fit the specific needs of each client. Our factoring lines range from $50,000 to $20MM, giving businesses flexibility and room for growth. For a free, no-obligation consultation and factoring approval, complete the form below, or call 800-707-4845.

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