There are Many Terms for Invoice Factoring

There have always been many terms for a 4,000 business known to most as factoring, a financial strategy also known as invoice factoring or accounts receivable factoring. There is also debt financing and invoice discounting, terms that are used as well, but that do mean something different.

So what IS the difference between factoring and invoice discounting -- which is also known as debtor financing? In truth, these tactics are basically almost the same. Similarly, both are designed to improve your cash flow.

Invoice factoring is a sale of a company’s receivables to a factoring company, and as the owner of the business you would get the cash from the factoring company and the factoring company collects the debt from your client –the one that you invoiced for a service accomplished or product purchased. They typically keep the interest and get a discount fee. On the other hand, invoice discounting can also be termed a sale of receivables, but the difference is that the receivables and their collection does not ever change hands. The business that earned the income is the responsible party.

It does not matter if you are a small business or a large company, rather than having to wait for your customers to pay after you have invoiced them, invoice factoring simply releases the money as soon as you have completed an order and sent your client the invoice.

Ideal for funding growth in your business, factoring can be linked to sales. This can be particularly helpful if your firm has not yet built the financial track record. Factoring is a beneficial tool for business owners in time of financial need, and especially in today’s market were obtaining loans from banks and other traditional financial institutions is more difficult, and at best, an arduous task. That's where single invoice factoring services come in. This is a unique, simpler and superior method of factoring to standard invoice factoring services provided by traditional old line factors. This factoring solution offers short-term working capital to growing businesses who often find it difficult to attract conventional funding.

A factoring company will simply approve your client's invoices and then they will put your accounts receivable factoring in place. There is no limit to the amount you can borrow because these funds will always be linked directly to your sales and outstanding invoices. The due diligence process for invoice factoring is designed to minimize risk when it is followed closely and diligently, and it has been designed to protect the factoring company who collects and analyzes information.

Invoice factoring it is an extremely fast way to turn your receivables into cash. In an ordinary scenario you might have to wait 30, 60, or sometimes even 90 days for invoices to be paid. IFG can pay you the majority of what's owed to you within as little as 24 to 48 hours.