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How does invoice factoring work?

When you factor a customer invoice, you can get immediate access to working capital in the form of an advance, which is usually expressed as a percentage (such as 90%) of the face value of the invoice.

The remainder (less the factoring fee) is then placed in ‘reserve’ against future customer payment of the invoice. As an example, let’s say that you are billing a customer in the amount of $15,000 but you want to access the funds without waiting weeks – or months – for your customer to pay.

Assuming a factoring fee of 5%, and an advance rate of 90%, here’s how it would work:

Timeline
Day 1 Generate a $15,000 client invoice and factor it
 – Same Day Receive an advance of $13,500 (90% advance)
Factoring company earns $750 (5% factoring fee)
Day 30-45-90+ Your company receives the $750 reserve amount after the invoice is paid

Invoice Factoring Speeds Up Business Cash Flow

1. CREATE AN INVOICE

Generate a customer invoice and factor it on the same day.

2. GET AN ADVANCE

Get free funding on factored invoices up to 90% of the invoice amount in 0-2 business days.

3. GROW FASTER

Use expedited cash flow to keep pace with expenses or reinvest in growth more quickly.

How does invoice factoring work?

Use our invoice factoring calculator to see how much working capital you could unlock immediately by factoring invoices with Corsa Finance instead of chasing customer payments.

What type of companies benefit from factoring invoices?

The need for consistent cash flow is the most common reason companies should factor invoices. Expedited cash flow is the main benefit, although not the only benefit, of invoice factoring.

Companies that need immediate access to working capital tied up in receivables can factor them in order to speed up business growth, take on new business, expand product or service capabilities, cover operating expenses or maintain cash flow consistent with the financial needs of their business.

By creating more consistent, expedited cash flow, an organization can:

  • Negotiate discounts with vendors and suppliers
  • Take on new jobs or bigger orders more quickly
  • Meet payroll and expenses more easily
  • Stop losing time and money chasing down customer payments
  • Make needed equipment purchases, repairs, renovation or expansion
  • Extend more generous terms to their customers as a competitive advantage
  • Take advantage of fast-emerging opportunities more easily

If one or more of these benefits could help you grow your business more quickly, we would be happy to provide you with a free, no obligation proposal for receivables factoring.

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Why Factor Invoices with Corsa Finance?

  • Low Fees, High Advances and Long-Term Experience

Working with us doesn’t cost you more, but it might help you get a better invoice factoring agreement. Apply at no cost or obligation and we’ll work to put a program together with terms most important to you:

  • Factoring fees as low as 5% on small invoices or lower for larger balances
  • Advances up to 90%
  • Free funding – same or next business day
  • No long term contracts
  • No monthly factoring minimums (you choose when and how much to factor)
  • Ability to retain control of customer billing
  • Full recourse, non-notification, or non-recourse factoring that limits your credit risk
  • Credit checks on new customers
  • No application or due diligence fees
  • No schedule processing, notification or any other hidden fees
  • Great customer care and knowledgeable account managers

Our team has more than a decade of experience in invoice factoring. We have walked clients from application all the way through the day-to-day invoice factoring process. We understand how the process works and what type of companies might benefit most from using receivables financing to speed up cash flow.

  • Overview of the Invoice Factoring Process

Your business sells products or services to another business or organization. For each order fulfilled, an accounts receivable invoice is generated.

How does invoice factoring work to speed up business cash flow? Rather than managing the invoice yourself and then waiting weeks or even months for your customer to make payment, you can choose to use invoice factoring (also known as receivables financing or accounts receivable factoring) and gain immediate access to working capital.

When you factor invoices with Corsa Finance, you may be able to receive immediate access to as much as 90% of the full amount of each invoice factored. This is money that might otherwise be tied up for weeks or even months as a receivable. The remainder is placed in reserve, pending payment of the invoice by your customer.

Once your customer has submitted payment and the amount of the invoice is satisfied, any amount held in reserve is forwarded to you as well. A low factoring fee (which could 5% or lower) will be your company’s all-in cost for this type of financing in most cases, depending on the details of your factoring agreement.