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Receivables factoring

Receivable factoring is a finance solution that allows business owners to quickly turn invoices into working capital. In spite of waiting for weeks for customers for paying their invoices, receivable factoring lets business owners to get an advance for those invoices and use the cash to fulfil the business needs instead of waiting for customers to pay. It’s more considered for the businesses that have long net terms but along with that have ongoing operational expenses.

Receivable factoring makes it possible to finance an existing business for the needs. Getting a debt helps business in generating capital for the maintenance and growth. Factoring receivables is a kind of financial transaction and debtor finance in which a business sells its accounts receivable or invoices to a third party/factor at some discount. A business performs receivable factoring of its assets to meet and overcome its present and immediate cash needs. Factoring is commonly known by accounts receivable factoring, invoice factoring and sometimes erroneously accounts receivable financing. Receivable financing is a term that is more accurately used for describing a form of asset-based lending using a company’s accounts receivable or invoices as collateral.

How receivable factoring works

Receivable factoring is a form of business finance which begins when your business provides products to thee creditworthy customers. After completion of service i.e. shipping goods, your business would follow the steps below:

  • 01
    You send invoices to the customer for business and sends a copy of it to the factoring company.
  • 02
    The factor then provides you with the funds for your business with an advance which is typically between 70% to 90% of the invoice amount.
  • 03
    You get the remaining invoice amount, once the customer pays the invoice minus a small fee.

Receivable factoring is important for business owners who generally handles a lot of invoices, need funds more quickly, and are waiting for the payments from their customers.

Why receivable factoring is important

  • Provide cash liquidity without taking on debt
  • Helps to refill business growth when the new opportunities arise
  • Solve short-term and everyday working capital crunches that arise due to uneven cash flow
  • Maintain inventory for on-going and even new projects

When to use receivable financing

  • When you want to grow business without incurring debt
  • When you can’t avail or qualify for a bank loan
  • When there is a need for more than one source of capital

Why you should choose receivable factoring

  • check_circle_outlineProvide finance to help you to grow your business
  • check_circle_outlineIt is easier to get than other finance solutions
  • check_circle_outlineIt does not require you to give up equity
  • check_circle_outlineIt is used as a short-term solution

The application process

The application process is simple and only takes a few days. To get started, the following information is requested by the factoring companies:

  • Application form
  • Articles of incorporation
  • Recent receivables report
  • Audited financial statements
  • Full business plans
  • Financial forecasts
  • Credit reports
  • Details and references of the directors
  • Information on assets and liabilities

For complex situations, or applications that demand for large amounts, the applicant may require to submit some additional information.

Want more information about receivables finance? or looking for most suitable finance solution for you? Talk to our finance experts now.

Features of Connect2India finance

Why finance with Connect2India

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Easy processing

Complete online application process makes it easier for us to process forms faster and provide same day loan approvals.

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Fast disbursals

With online loan processing, business loan is disbursed within 3-5 business days of loan approval.

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Collateral free loans

No need to put your valuable assets in risk, we have unsecured loan that do not require any collateral.

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Fair interest rates

Our advanced algorithms determines the best rates for the type of loan you business require.

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No hidden costs

There will be no hidden costs or any other charges involved. Only processing fee of 2% is charged

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Flexible repayments

Loan repayment structure can be customized depending upon how your business is growing.