How Does Invoice Factoring Work?

Triumph Business Capital YouTube channel provides its audience with a lot of educational and captivating content. One of their videos, What Is Invoice Factoring, deals with the basics and details of invoice factoring. You can check out this video to better understand the subject.

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What Is Invoice Factoring?
Businesses need cash flowing in and out to thrive. However, small and medium-sized businesses often struggle with cash flow. A major factor is that getting payments from other businesses for their products or services may take too long.

Invoice factoring is a service by a factoring company that buys invoices at a small percentage or service fee. The business gets an advance on the invoice payment while the invoice factoring company deals with collecting the debt.

How Does It Work?
1. Partnership
A business finds a factoring company for its services.
2. Risk Assessment
An invoice factoring company will assess and then buy invoices based on the debtor’s credit, not the business. It reduces the chances of losses.
3. Selling The Invoice

Once transactions are complete, send the invoice to the factoring company. The funds should flow in within 24 hours.
Wrapping Up

Invoice factoring has less hassle than a loan and can keep a business afloat.

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