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Invoice Factoring

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TRANSFERRING UNPAID INVOICES TO IMPROVE CASH FLOW

Why sell your invoices?

  • You need to receive funds quickly.
  • You need to settle outstanding obligations.
  • You need to free up cash flow tied up in accounts receivable (A/R).

What is Invoice Factoring?

  • This financing method enables businesses to sell unpaid invoices (accounts receivable) to a factoring company (factor).
  • The factoring company buys the invoices for a fee (commission and interest) and handles collection.

Three ways to sell your invoices

Transfer without recourse

  • The factor takes on the risk of non-payment. However, fees account for around 30% of the invoice!

Transfer with recourse

  • The factor is not liable for uncollectible receivables. If your customer doesn’t pay, the factor can ask you to repay the advanced amount. The fee is about 6% of the invoice.

Transfer of insured invoices

  • The factor pays an excellent price for your invoice because the risk of non-payment is low. The fee is about 3% of the invoice, but you are not responsible for the outcome.
Invoice Cover is a commercial-line damage insurance brokerage. Through its brokers, Invoice Cover is registered and licensed in the province of Quebec.

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