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Sell Accounts Receivables

sell accounts receivables

Selling accounts receivable is becoming more and more popular with businesses of all sizes. This process is formally know as Accounts receivable factoring. It allows businesses to get the money that they need without going through the traditional lending process. Factoring approvals are not based on the businesses credit history, it is determined by the assets the business has through accounts receivable. With low cost to the business selling accounts receivable is a great way for businesses to get money without using a traditional loan.

Common uses for selling accounts receivable

  • Working capital for business
  • Meet payroll obligation
  • Meet any payment obligations
  • Purchase inventory
  • Purchase Supplies
  • Pay taxes
  • Money to start a new project

What is selling accounts receivable?

Selling accounts receivable is known as factoring, it is where a business sells their accounts receivable to a factoring company for cash. The business typically receives 70% to 85% of the accounts receivable. The process typically takes a day or so and the money is directly deposited into the businesses bank account. Factoring is not a loan, it is actually selling accounts receivable for cash to use in any way your business sees fit. Selling accounts receivable does not affect the businesses credit rating leaving it open for any other business financing needs.

Recourse or Non-recourse?

When selling accounts receivable your business has an option of using non-recourse and recourse factoring. With non-recourse factoring if the customer who owes money to your accounts receivable does not pay your business is not responsible to repay the advance made by the factoring company, they must seek out the funds. With recourse factoring if the customer does not meet their payment obligation your business is responsible for repaying the money that was advanced by the factoring company. When using recourse factoring your business is assuming the risk and with non-recourse the factoring company assumes the risk which ends up costing the business a little more money. If the business trust that the customers will repay the loan choosing recourse financing can be more cost effective but if the business does not trust the customer to make the payment it would be rise to choose non-recourse to keep this type of financing more cost effective.

Common benefits of selling accounts receivable

  • Fast approval process
  • Money in hand within days
  • Does not effect the businesses credit
  • Is not determined by the businesses credit
  • Low cost
  • No waiting on customers to pay their invoice total

Terms and conditions to selling accounts receivables

When selling accounts receivable there are terms and conditions that apply from the factoring company as well as fees that apply. The factoring company will require a contract stating these terms, typically month to month. If a business decides to stop using a factoring company they may be required to give 3 months notice to avoid any early termination fees. The factoring company charges three main fees when using their services; discount charge fee, management fees, and a credit protection charge. Each of these fees are rather low staying under 3% of the businesses turn over.

How to sell accounts receivables

  1. Find a factoring company that offers these services
  2. Make sure your business meets the factoring companies requirements
  3. Submit your business and accounts receivable records
  4. Negotiate the terms and conditions of the contract
  5. Sign the contact and submit your businesses direct deposit information

Tips when selling accounts receivables

  • Visit a few different factoring companies to compare their prices
  • Always negotiate the terms and conditions of the contract before signing
  • Make sure that this is the right financing option for your business by doing some research on it
  • Be aware of the fees associated with selling accounts receivable to make sure that there are no hidden fees
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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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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