Funding exports and accounts receivable is an essential aspect that all small business owners need to be aware of. Invoice factoring is a type of accounts receivable financing that converts outstanding invoices within 90 days into immediate cash for an organization to use on other essential aspects of business.
In any industry, small businesses require plenty of cashflow to not only keep their business afloat, but to succeed and thrive in any competitive market. By turning your outstanding invoices into immediate cash, you’ll be able to purchase enough inventory to reach your sales goals, hire more hardworking employees for your team, open up new locations down the road, offer credit terms and vendor discounts, and — most importantly — pay all your business expenses.
Here is a helpful explanation of the invoice factoring process:
- Step 1 — First, you’ll continue to deliver products or services to your customers as you normally would. Instead of simply waiting for your invoice payments to come through, however, you’ll send the invoice to both your client and the direct lender you’re working with.
- Step 2 — Next, depending on the direct lender you’re doing business with, you’ll start seeing a significant increase in your cashflow. Certain direct lenders can offer up to 97% of the face value of your invoice within hours of receiving a copy, meaning you won’t have to wait to get paid and can use that money for whatever is necessary.
- Step 3 — Then, as soon as the 90-day period has passed and the invoice is due, your direct lender will undertake all collection work on your behalf. Your customers will then pay your direct lender the exact invoice amount.
- Step 4 — When it comes to funding exports and invoice factoring, the final step of the process involves paying for your services. As soon as the payment has been received, your direct lender sends the balance of the invoice back to you and then you’re all set!
If you want to learn more about funding exports and work with professional invoice factoring services in the United States, contact Eagle Business Credit today.