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What is Invoice Factoring?

 

Are you curious about the concept of invoice factoring and its potential benefits for your business? Allow us to shed light on this financial solution. Invoice factoring entails the sale of your accounts receivable (invoices) to an invoice factoring company, with a small discount applied. Upon assessing the creditworthiness of your invoiced customer, factoring companies can advance up to 100 percent of the invoice amount, swiftly generating cash flow to fuel your business operations.

 

Under a recourse factoring agreement, you can typically expect a full 100 percent advance, while transportation companies engaging in a non-recourse factoring agreement would likely receive a range of 90% to 97% advance. In the case of a business factoring agreement, advances of up to 95% can be anticipated.

 

Furthermore, once your customer settles the invoice, the factoring company will remit the remaining balance, after deducting a fee, directly to your business. This process eliminates the burden of waiting for extended periods, which often range from 30 to 120 days or more, to receive payment from your customers. Instead, you can experience the liberation of having your invoices funded within a remarkably short span of 24 to 48 hours.

 

Don't have a designated factoring arrangement yet? Worry not! For a comprehensive understanding of how invoice factoring operates, please don't hesitate to reach out to us at Golden 5 Logistics. We eagerly await the opportunity to address any queries or concerns you may have and assist you in getting started! We look forward to hearing from you!

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