Businesses that are waiting to get paid and that are in need of working capital sell their invoices to improve their cash flow. If you’re asking yourself “should I sell my invoices?”, here are a few things you should know.
The process of selling your invoices for cash is commonly called invoice factoring. Here’s how it works.
First, choose a factoring company. Once you’ve selected one and are set up, send your invoices directly to your factoring company. Instead of waiting for customer payment, the factoring company will provide you an immediate cash advance on your open invoices, typically around 90 percent. Once your customer pays the invoice weeks or months later, the remaining balance is remitted back to you, less a small fee for the service.
When you choose to sell your invoices through invoice factoring services, the cost can vary depending on many items. Some of the variables include your industry, your invoicing volume, the creditworthiness of your customers, and how long it takes for them to pay. For most factoring companies, the fee is between 1-5 percent of your invoice volume.
Most factoring companies allow you to choose which customer invoices you wish to factor. If one of your customers takes 45 days to pay, you may decide to sell those invoices. Whereas another one of your customers may take only seven days to pay, you might choose not to sell those. Top factoring programs customize programs to fit the needs of each business.
Not only will selling your invoices improve your cash flow, but top factoring companies often provide additional services. For example, TCI Business Capital provides treasury services, credit management, accounts receivable management, and collections services through a dedicated AR specialist to help save your company time so you can focus on growing your business.
Since 1994, TCI Business Capital has been buying invoices to improve cash flow for businesses across the United States and Canada. If you’re waiting to get paid and could use the cash that is tied up in your invoices, contact us today and get a consultation and quote for an invoice factoring program in as little as 15 minutes. Fill out the form below or give us a call at (800) 707-4845. We offer month-to-month programs ranging from $50,000 to $20 million.