What Is Single Invoice Factoring?

Business owners often need to find a way to utilize the money that they have coming to them but is currently in pending payment. For those that find themselves in this situation often, this is where single invoice factoring comes in handy. Learn more about this process and how it can make running a business easier to handle.

The Terms Used in Single Invoice

It’s important to understand that using a single invoice factoring is not the same as getting a loan. Technically, this is money that the customer has already paid, but it’s still sitting in pending. There are different rates that can apply when factoring invoices, which range anywhere from 5% all the way to 30% or more. It’s important to look around and get the best rates before committing to factoring invoices.

The Benefits of Single Invoice Factoring

Although fees are a common issue when dealing with companies that help with this process, it’s not a reason to hold back. Lenders don’t pay attention to credit scores. Instead, they’re curious to see what kind of income or cash flow the business has. In this class, the invoice is more important than the business owner. This provides business owners with a resourceful and simple way to take advantage of the money coming to them without dealing with a loan or losing money. 

Choosing to Use Single Invoice Factoring

Choosing to use single invoice factoring means business owners need to take a look at their accounts receivable. Getting the money from invoices involves an outside party coming in and buying any outstanding invoices the company has. Because a customer’s invoice might not clear from anywhere between 30 days to 90 days, this is a helpful method of getting the money quickly and using it for the business or other expenses. After this occurs, it’s up to the business owner to manage the transaction and ensure everything is completed on this end.

If a business needs funding and is waiting on pending invoices to clear, choosing single invoice factoring is an ideal way to handle this issue. Although there is a charge for using this, it’s not viewed as a loan, and the company in question cares more about the invoice than the credit score of the business owner. It’s a useful way to use money that is owed to the business but sitting in pending. Using it is simple enough, with little management on the part of the company owner, making this a helpful resource when needed.

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