Your business cycle as it is TODAY:
Day 1
Your invoice your customer and put the invoice in the mail.
Days 2-59
You wait for payment from the customer.
Unfortunately, your customer takes longer than anticipated to pay their invoice.
You may have to:
- Call your customer numerous times
- Send them another copy of the invoice,
as they misplaced the original
- Wait for a check that was supposed to be in the mail
Day 60
Whew! You finally receive a check for $1,200 on Day 60.
Now you can get back to business and start the
cycle all over.
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Your business cycle with a Factoring Program
Day 1
Upon invoicing your customer, you present the $1,200
invoice to the factor. In as fast as 24 hours, a wire
for up to 85% of the face value of the invoice ($1,020)
is sent to the bank account you designate.
Day 2-59
With your money in the bank, you can return to the day-to-day management of your business.
Your factor informs your customer to send payment to the factor and handles the details
of collecting from the customer, including collection calls and faxing any duplicate copies
of invoices. Because you received the bulk of your payment on Day 1, you avoid both cash flow shortages
and collection hassles. Additionally, during the past two months, you were able to use that money to pay bills,
purchase more supplies, generate sales and grow your business.
Day 60
The factor finally receives a check for $1,200.
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