Invoice factoring is offered by financial institutions for outstanding invoices by providing immediate cash to the business so that it can meet its short-term liquidity needs.
Access Money has entered into partnerships with Canada’s top invoice factoring providers to help small businesses get access to immediate funds. Contact us to learn about the best invoice factoring options in Ottawa and Ontario.
Small businesses have the option to pre-apply with Access Money and get your information reviewed and matched to reputable loan partners most suitable for your invoice factoring needs.
What is invoice factoring?
Invoice factoring as a financing option that allows a business to turn unpaid invoices into instant cash.
The option is fast and convenient but is highly expensive.
How does invoice factoring work?
Invoice factoring is simply selling your invoices to an invoice factoring company at a discount. You are paid immediately. Therefore, invoice factoring becomes a great way to access quick cash when customers are slow to make payments. It solves cash flow problems rather than relying on your customers to pay up.
First, find a good invoice factoring company that has a favorable factoring rate. It is easy to find good invoice factoring companies by searching online and comparing invoice factoring rates. Access Money provides a table for comparing invoice factoring companies.
Invoice Factoring Fees
An invoice factoring provider’s fees are based on several internally-defined variables such as:
- The volume of monthly receivables: The fees are lower for a greater volume of monthly receivables since the lender can generate economies of scale on high volumes.
- Size of Invoice: From a banking perspective, small-sized invoices are more favorable since they carry lower risk. The big revenues have a greater risk for a financial institution due to repayment risk being concentrated in a small group of debtors.
- Industry: Some industries carry more risk compared to others owing to factors such as cyclicality, seasonality and other economic problems. Higher fees will be charged on invoices from high-risk industries.
- The creditworthiness of a customer: Smaller businesses are considered high risk compared to corporate and government entities that have a low risk of repayment.
- Repayment Schedules: Customers who have taken longer to repay in the past will be charged higher to cover the risk of non-payment.