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AR Factoring

ar factoring

For many businesses obtaining business financing can be difficult, especially for those who have less then perfect credit ratings. With Ar factoring business owners can get the money they need without their credit history being a factoring. Ar factoring is the sales of the business accounts receivables to a factoring company in exchange for a cash. Ar factoring is not a loan, it is an advance on money owed to the business by their customers invoices that have not yet been paid through a factoring company. This company receives a payment for their cash advance services but it remains a cost effective way for businesses to raise working capital without waiting on customers payments.

Common uses for AR Factoring

  • Meet payroll obligations
  • Generate money to start a new business project
  • Inventory purchases
  • Equipment purchases
  • Renovation expenses
  • Construction expenses
  • Payment of taxes
  • To create working capital for the business

What is Ar factoring?

Ar factoring is also know as Accounts Receivable Factoring. It is where a business sells their accounts receivable customer invoices to a factoring company in exchange of a cash advance ranging from 70% to 85% of the invoice total. Ar factoring is not a loan, it is the sale of an asset (customers invoices) so the determination of approval is based souly on your customers invoices not on your businesses credit history. Ar Factoring has long been looked at as a last resort for business financing how ever it turns out to be a popular and cost-effective way for businesses to get the money that they need without affecting their credit rating. With bank lending not what it once was, Ar factoring is becoming more and more popular with businesses in need of financing. Ar factoring is easy to get, have relaxed terms and conditions and the funds are typically available immediately.

Common benefits to Ar Factoring

  • Fast cash for businesses
  • Negotiable and relaxed terms and conditions
  • Easy to obtain
  • Not determined by businesses credit history
  • Does not effect businesses credit rating leaving them able to receive other forms of business financing if need be
  • Low fees
  • Cost effective financing option

Terms and conditions of Ar Factoring

All factoring companies have their own terms and conditions set up to protect their investment into the business selling invoices. These terms and conditions are often negotiable.
Cost is an important factor in any type of business financing. Ar factoring offers businesses with three main types of fees;

  • Discount charge is calculated daily, ranging from 1.5% to 3%. It is applied to the principle balance monthly.
  • Management fees are determined by your turnover which is the volume of your invoices and the number of customers you have, cost ranges from 0.75% to 2.5% of total invoices.
  • Credit protection charges are applied to those using non-recourse factoring, ranging from 05% to 2%.

When looking into a Ar Factoring company it is important to make sure there are no hidden fees and you know exactly what you are paying for.
Typically Ar Factoring companies have a cancellation fee if services are discontinued without proper notices, typically 3 months.

How to use Ar factoring

  • Find a factoring company that offers these services
  • Make sure your business meets the factoring companies requirements
  • Submit your business information along with you accounts receivable information
  • Negotiate the terms and conditions if possible
  • Sign the contract and submit your businesses bank account information for direct deposit

Tips when using Ar Factoring

  • Look into several different Ar Factoring companies
  • Pay attention to the fees and make sure there are no hidden fees
  • Research Ar Factoring to make sure it is the right financing option for you business
  • Always negotiate the terms and conditions of the contract to ensure your business is getting the best.

Business owners are always in need of different financing options. While Ar Factoring has been around for hundred of years, now that banks have so many restrictions on their financing many business owners are now beginning to take advantage of it. While for a long time Ar Factoring was looked at as a last resort form of business financing today it is looked at as a cost effective way of generating working capital for a business.

When You Are Ready, We Are Here

Factoring.net is ready when you are. If you’re running low on working capital or just need some extra funds, Factoring is a great way to leverage your already existing assets – your receivables. Fill out the short application now or give us a call.

  • Factoring is not a Loan, it's a sale of YOUR receivables!
  • Our rates are the lowest in the industry, starting at 1.5 %.
  • We offer a non-recourse factgoring. Sleep soundly at night!
  • We fund approved deals within 48 hours.
First time factoring?Learn about Factoring

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Don't take our word for it

Everyone was very helpful to our company throughout the process. We really needed to get cash for invoices immediately, and Kris along with the rest of his team delivered.

- Kristin Wintum Charles Town, WV testimonial
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