Can I Sell My Invoices to Improve My Cash Flow?
Why sell your invoices ?
- Need to receive cash quickly
- Pay any outstanding obligations
- Free up cash flow that is tied up in Accounts Receivable (A/R)
What is Invoice Factoring ?
- A financial product that enables businesses to sell unpaid invoices (accounts receivable) to a third party factoring company (a factor).
- The factoring company buys the invoices for a percentage of their total value and then takes responsibility for collecting the invoice payments.
3 ways to sell your invoices
Transfer without recourse
- The factor takes on all the risk for unpaid invoices. Lose about 30% of the invoice value!
Transfer with recourse
- The factor can demand money if it cannot collect from customers. Lose about 6% of the invoice value but remain on the hook if your customer does not pay.
Transfer Insured Invoices
- The factor pays top $ for your invoice because the risk of non-payment is removed. Lose about 3% and not responsible for the outcome.