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What is Invoice Factoring?

Business Definition for: Invoice Factoring

The practice of transferring title of accounts receivable to a third-party (factoring companies) at a discount, in return for prompt cash.

There are many ways to maintain a positive cash flow for growing companies and dealing with accounts receivable issues. One popular way to increase cash flow is invoice factoring. Also known as Accounts Receivable Factoring, Invoice Factoring is the practice of selling your accounts receivable (invoices) at a discount to factoring companies. You get the money from the company that you sold your accounts receivable to and the factoring company become responsible for collecting on the invoices.

The reason many businesses make this move is to ensure the continuous flow of cash to the business. Essentially, businesses who use invoice factoring are focusing on having most of the money now rather than all of it later. It can take time to collect on an invoice, so when a company finances its accounts receivable, they are getting their money faster and without the hassle of the collection process.

With small businesses, it is even more important to free up working capital through factoring. The money can be invested into new equipment, used to pay bills, or used toward payroll. Of course, the alternative is to chase the customer for the invoice payment and defer everything else while the money is tied up in the collection process.

In order to fully understand invoice factoring, you should be familiar with the service: You may consider the following ideas so that you may have a better understanding of invoice factoring. It could be best option for your business.

Invoice Factoring Company for Houston Businesses

Do you sell products or services on credit term to businesses in Houston Texas?  At Charter Capital, we make invoice factoring simple to obtain, with minimal requirements, and usually can have a decision the same day. If your Houston-based company sells to other businesses on credit terms, then your company may qualify for invoice factoring. After you have been approved and all documentation is complete, we typically offer same-day funding.

Invoice Factoring companies like Charter Capital provide financing used by businesses to convert sales on credit terms to cash flow. The receivables are secured as collateral and the business may draw cash against the eligible accounts receivable at any time. Invoice Factoring, also know as Accounts Receivable financing is not a loan, so it is not a debt to your business.

Invoice Factoring is quickly becoming the preferred financial tool for obtaining flexible working capital for small to medium size businesses.

Houston Businesses benefit from Invoice Factoring
By factoring their invoices, many business owners realize that they don't have to borrow money from a bank in order to get the financing they need. Invoice Factoring considered a purchase of the accounts receivable at a discount and not a loan. This gives the company immediate cash flow secured by the outstanding invoices.  With Charter Capital, this is done without going through huge amounts of paper work and waiting weeks for a decision.

Charter Capital specializes in evaluating accounts receivable and can make a prompt approval decision. The credit is determined by the financial strength of the business' customer (Buyer or Account debtor), not the client (The seller of the invoices/receivables). Our approval process is simple and quick, enabling our clients to acquire funds within 24 hours.

Houston Businesses Qualify for Invoice Factoring
Houston Texas businesses can qualify for invoice factoring on accounts receivable where credit terms are offered to credit worthy businesses.  Many of our clients are fast growing companies whose past earnings and sales histories can hinder their ability to attain traditional bank financing. Charter Capital can accommodate start-up operations with no financial base to rely upon or companies with seasonal or uneven sales patterns.

Industries in Houston Texas That Qualify for Invoice Factoring
Accounts receivable financing is available to all industries that provide products or services to other businesses. The sale must be "final sale" and have no disputes on invoices that will be considered for funding. The product or service must be completely delivered in order for an invoice to be eligible for invoice factoring. Any industry that meets this criteria is a candidate for factoring.

Please call 1-877-960-1818 for more details and Request a Quote today.