Accounts Receivable

What Is Accounts Receivable Factoring?

Accounts receivable factoring works by selling your open accounts receivables to a factoring company, in exchange for fast cash. As a result, companies have access to capital to meet payroll, pay bills, purchase equipment and supplies, and much more.

Companies use accounts receivable factoring because it is a fast, simple and a debt-free financing solution for businesses that cannot wait for payments from their customers. Companies in a wide variety of industries use Whitmore Financial for their factoring needs. We customize our factoring services to fit the unique situation of each client and help them reach their business goals. Qualify for our factoring programs today with a minimum of $10,000 in monthly invoicing.

How Does Accounts Receivable Factoring Work?

Accounts receivable factoring is an easy process. Here’s how it works:

  1. A company using accounts receivable factoring provides the service or product to their customers as normal.
  2. When it’s time to invoice the customer, the company sends the invoice to their factoring company.
  3. Once the invoice is received, the factoring company advances them a percentage of the value of the invoice.
  4. The invoice is forwarded onto the customer, who then pays it in their normal terms.
  5. Once the invoice is paid to the factoring company, the remaining balance is rebated to the company, less the factoring fee.

What Are the Benefits of Accounts Receivable Factoring?

There are numerous factoring benefits. First, companies that are not eligible for traditional lending easily qualify. Factoring lines are based on your customers credit and payment history, not that of your business.

Second, having cash available helps companies meet payroll, purchase supplies and materials, settle payables, and grow. With cash on hand, companies eliminate the stress and worry over payroll, and can take advantage of new opportunities as they arise.

Finally, leading factoring companies like Whitmore Financial offer value-added services to aid and assist clients. These services include experienced relationship managers, invoice review and billing support, AR management, 24-hour online reporting, and much more. As a result, these services strengthen your business and free up your time to serve your customers and grow your business.

How Does Your Business Grow With Accounts Receivable Factoring?

With the available cash provided from accounts receivable factoring, businesses can take advantage of new opportunities for growth. Adding equipment or staff, opening new markets, or introducing new products are all much easier with cash in hand.  Consider the following table below to see how accounts receivable factoring can lead to growth and profits.

Sales Sales with Factoring % Increase Sales with Factoring % Increase
Sales $100,000 $200,000 100% $300,000 200%
Cost of Sales ($75,000) ($150,000) 100% ($225,000) 200%
Gross Margin* $25,000 $50,000 100% $70,000 180%
Fixed Costs ($15,000) ($17,000) 13% ($17,000) 13%
Cost of Factoring $0 ($3,000) ($4,500)
Net Income $10,000 $30,000 200% $48,500 385%
*Opportunities to negotiate early pay discounts and ask for quantity discounts

Why Do Companies Use Accounts Receivable Factoring?

Accounts receivable factoring is an ideal choice of financing for many companies. Those in a start-up or growth phase are often ineligible for traditional bank financing. However, these companies easily qualify for factoring.

There are also situations where factoring receivables is a better choice than bank financing. Because top factoring companies like Whitmore Financial have experience in a number of industries, companies can gain insight and information on industry best practices and current trends.

Why Accounts Receivable Factoring With Whitmore Financial?

Since 2011, companies across North America have selected Whitmore Financial for their accounts receivable factoring needs. At Whitmore Financial , we provide our clients superior service and support.  Our portfolio of services includes:

  • Quick Approvals: We can approve your company for factoring in as little as one business day.
  • Fast Funding: Once your account is setup and active, we provide same-day funding.
  • Online Reporting: Real-time access to account activity and reports.
  • Competitive Rates: Factoring rates customized to fit your business needs.
  • Growth Opportunities: Factoring lines ranging from $10K to $30MM.
  • Customer Service: You’ll receive dedicated relationship managers and funding teams, with knowledge and experience.
  • Industry Expertise: We factor companies working in a variety of industries.
  • Accounts Receivable Management: Our accounts receivable management services include integration with billing software, image archiving and payment postings.
  • Credit Analysis & Risk Management: We make credit and payment information available so clients make the right choice when working with new customers.
  • Accounts Receivables Management: A dedicated AR department helps ensure that payment is made in a timely manner.

For more information on accounts receivable factoring with Whitmore Financial, call us at 800-326-0704, or contact us via the web.