Invoice factoring offers a valuable addition to any financing program. However, if you haven’t used this strategy before, you might not be sure how to get started or if you will qualify. The process is relatively easy — you just need some simple information to get started.
Having a diverse financing plan gives your business flexibility. By setting up various funding options, you protect against cash flow emergencies. You also optimize your growth potential by maximizing the resources you have available to respond to market opportunities.
The key is to take advantage of every resource available to you. Invoice factoring helps you do that. You’ll get the most out of the money you’re already owed, letting you keep your business moving forward.
To add this financing option to your toolbox, you just need to gather some documentation and find the ideal factoring partner.
Here are the steps you need to take to qualify for invoice factoring.
What Is Invoice Factoring?
Before outlining the process involved, it’s important to understand the basics of invoice factoring. This financing option provides an excellent way to shore up your cash flow. It allows you to receive money for sales you’ve already made but haven’t collected yet. At the same time, it speeds the process of receiving the cash you’re already owed.
Through the process, you use your unpaid invoices as a source of cash. You receive money from a factoring company, which then takes a fee for the service. Meanwhile, you lower your risk and make sure your cash flow is as predictable as possible.
When you apply for invoice factoring, you’ll need to provide basic info about your company. These are the types of documents that come into play with any financial transaction. Basically, you’ll need to identify your business and give supplementary documentation.
Here are a few of the specific items you’ll likely need:
- Articles of Incorporation
- Details about your business bank account
- Your tax ID number
- Personal identification (like a driver’s license or passport)
Information on Your Invoices
Beyond the basic info, you’ll need some specific data about your customers in order to qualify. This will help the factoring company understand the cycles of your business. The firm can deduce their credit quality and create a factoring plan that fits you.
Here are a few specifics to keep in mind:
- Provide the factoring firm with the invoices you want to factor
- Create an aging report for your accounts receivable
- Share details indicating that your clients are credit-worthy
The Right Factoring Partner
The information listed above will be necessary in almost any factoring situation. However, your work doesn’t end with gathering this paperwork. You also have to choose the correct financing partner for you.
Ready to Start? We are Here for You!
A top funding company, like Frontline Funding, can become your go-to support to give your business the backing it needs to lower risks and to maximize its potential. You’ll get the cash you need to drive your company forward, without burdensome debt to weigh you down.
Contact Frontline Funding today to learn more about your invoice factoring options.