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Invoice factoring for businesses

Invoice factoring for businesses

Get the money you’re owed so you can grow.

How it works

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Available Capital

$20,000 to $20 million

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Time to Fund

2 to 3 days

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Fees

1% and up per month

Learn more about invoice factoring

Amerifi helps small business owners like you

with invoice factoring, accounts receivable financing, and other forms of funding that transform your outstanding invoices and unpaid contracts into immediate cash to grow your business.

You’ve just delivered a huge order. The whole team is celebrating.

But now you’ve got more orders coming in.

The rent on your office is due next week, and so is payroll.

Your marketing budget is running low, and you don’t know if you’ve got enough available credit on your cards to hold your business over until the payments for all your work finally start flowing in.

Invoice factoring or accounts receivable financing can mean the difference between progress and stagnation, between celebrating big wins and worrying about future prospects. These two business financing options provide small business owners with several ways to convert anticipated future revenue into immediate capital.

Not only can invoice factoring be a great way to ensure your ability to pay bills while waiting for your customers to pay their invoices, it can also help switch your business from maintenance mode to growth. You’ll be able to tap into immediate resources to fund sales, marketing, and other expansion efforts.

If payroll and rent need to be paid next week, but invoice payments are due from your customers in three weeks, invoice factoring can be a fast way to get the money you need to handle those obligations.

But what is invoice factoring, anyway?

Let’s be clear on what invoice factoring and invoice financing are not.

You can’t use these funding options to get paid for products or services you’ve yet to deliver. The unpaid invoices factoring services will accept are for things you’ve already done, not for things you’ve promised but haven’t yet delivered. However, there is a funding option to help businesses fulfill obligations they’ve yet to deliver: purchase order financing.

When you utilize invoice factoring or accounts receivable factoring, your business sells its unpaid invoices to an invoice factoring company. You can choose to factor any or all unpaid invoices, but the amount you sell, and which client invoices you factor, are entirely up to you. You can even factor some invoices from a client and retain others from the same client to process on your own.

You’ll receive a lump sum payment, as much as 80% of the unpaid invoice value, and the invoice factoring company will remit the remainder to your business bank account -- after accounting for its factoring fees -- when your customer pays them.

In this scenario, your customers pays their balances directly to the factoring company, which means you’ll most likely have to discuss the situation with your customers so there’s minimal disruption to your working relationship.

This is more important when your invoices and contracts are structured to be paid back over many months. Invoice factoring tends to be better-suited for businesses that fulfill invoices or contracts with extended payment terms, because getting most of a year’s worth of payments upfront a tends to produce a bigger impact on your cash flow than simply getting an early payout on a 30-day net invoice or other short-term invoices.

Because invoice factoring is based on sales you’ve already made or contracts you’ve already delivered on, it requires less paperwork and far less processing time than traditional loans. There is also no commitment to pay anything on your part once you've completed your factoring agreement.

We can typically secure invoice factoring for your company within two to three business days. Since the factoring amount is secured by the invoice itself, you won’t have to pledge any additional collateral, either.

A factoring company that offers invoice factoring will investigate a few key details, which include your customers’ business credit history, the total value of the invoices put up for factoring, your business’ sales volume, and whether or not they’ll ultimately be liable and responsible for unpaid balances.

Since it’s your customers’ creditworthiness being considered rather than yours or your company’s, invoice factoring tends to produce better outcomes if your customers are larger and more well-established companies. This is one of two business financing options we offer that places more importance on your customers’ creditworthiness than your own, the other being purchase order financing.

If final liability for unpaid invoices falls to the factoring company, it’s called nonrecourse factoring and will likely come with smaller payouts.

On the other hand, accepting liability for the invoices with recourse factoring might come with larger payouts, but it’ll also require your business to cover the remaining balance if the factoring company can’t collect what’s due.

Accounts receivable financing, sometimes called invoice financing, is similar to invoice factoring, but with a few key differences.

Instead of effectively purchasing your outstanding invoices or unpaid contracts, invoice financing companies will secure a loan with the invoices, giving you a similar amount of working capital while leaving you in control of the collections process.

Most financing companies view this as a riskier option than invoice factoring, as it takes a key step of the process out of their hands.

Invoice factoring works well for these types of businesses:

CONSTRUCTION COMPANIES


Construction companies are some of the best-positioned businesses to take advantage of invoice factoring or invoice financing.

Many construction jobs involve high-dollar-value contracts and extended repayment periods, or they may be structured with repayment tied to the completion of certain milestones.

If you’re trying to build your business while simultaneously trying to build a shopping center or subdivision, you’ll find it much easier when you can get the bulk of the money you’re owed for those projects upfront.

Invoice factoring or financing can also be critical to maintaining adequate materials, supplies, and manpower for your contracted projects if your business’ bank balances are low.

Many construction projects can demand significant resource investment from contractors before payments start flowing, which has hurt more than a few construction companies with the bad luck to deal with a customer who resists paying what’s owed.

A factoring company won’t want to work with a deadbeat customer any more than you do, but it can help you keep working for a good customer while you inch towards completing every milestone in your project.

Keep your construction company on the path to growth, and don’t let unpaid invoices slow your progress. Contact us about invoice factoring today.

Not sure if invoice factoring is right for your construction company? Check out our construction business resource page for more funding options and business loans.

HEALTHCARE AND MEDICAL


There are many niches in the healthcare industry, and some are better-suited to invoice factoring than others.

Cosmetic surgeons and other providers that perform complex and costly elective medical procedures, and don’t often work with insurers, are more likely to have invoices with high enough dollar values to be candidates for invoice financing. On the other hand, a doctor running a private practice may have many outstanding invoices, but most will be for basic services that aren’t billed at a high enough dollar value to be factored.

Medical equipment manufacturers with a catalog of costly products can be good candidates for invoice factoring, but manufacturers of basic supplies like gauze or sterile gloves might not have invoices worth enough to be factored.

The value of your individual invoice determines its eligibility for invoice factoring, so don’t hesitate to get in touch with us today to see if your healthcare business is a good candidate for this form of funding.

Not sure if invoice factoring is right for your medical company? Check out our healthcare business resource page for more funding options and business loans.

MANUFACTURING


Contract manufacturers often work with clients that demand substantial production volumes, and that can be a tricky proposition if you’re low on cash when you deliver the order. Waiting for payment from your customers can prevent you from taking on new ones, and the more complex the products, the less likely it is you’ll be able to simply change out a logo or two and keep working.

Invoice factoring can help smooth out the cash flows of manufacturers working for a few major clients that don’t take deliveries or make payments frequently.

It can also give manufacturers the means to add capacity without sacrificing progress on existing orders or locking up too many scarce resources on facility upgrades.

Many manufacturers, especially high-volume or high-value manufacturers working with extended repayment terms, can benefit from invoice factoring or invoice financing. Contact us today to see if your invoices qualify.

The value of your individual invoice determines its eligibility for invoice factoring, so don’t hesitate to get in touch with us today to see if your healthcare business is a good candidate for this form of funding.

Not sure if invoice factoring is right for your manufacturing company? Check out our manufacturing business resource page for more funding options and business loans.

SERVICE PROVIDERS


Making websites isn’t easy and it’s rarely quick if you want it done right. Auditing corporate finances is a big job that can take long hours. Upgrading a building’s IT infrastructure demands equipment, know-how, coordination, and care.

There are many kinds of services offered on high-dollar-value contracts with extended repayment terms, and plenty of service providers can run into trouble if a key client won’t pay in full for a long time.

Invoice factoring is a good way for growing service providers to cover the expenses associated with fulfilling large contracts. It can also help spark growth by providing a chunk of working capital for advertising and marketing that can bring in the next big client.

Service providers working with other small businesses may have a harder time obtaining invoice factoring, as their customers might not have the established business credit profile lenders want.

Talk to us today to see if your invoices are a good fit for invoice factoring or financing.

Not sure if invoice factoring is right for your service provider? Check out our service business resource page for more funding options and business loans.

Advantages of invoice factoring or financing

  • Converts unpaid invoices into accessible capital
  • Quick processing and approval times
  • No collateral required (if factoring)
  • No more time spent on collections (if factoring)

Drawbacks of invoice factoring or financing

  • Fees can be higher
  • Only useful for B2B companies with high-dollar-value invoices
  • You lose some control over your accounts (if factoring)
  • Depends on your customer’s business credit (if factoring)
  • May be liable for unpaid invoices

If you have...

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Time in business

3+ months

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Revenue

$10,000+ per month (annual revenue of $120,000)

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Credit score

500+

You could be eligible for up to $20 million in funding today!