#Commercial invoice factoring free#

The problem with MCA loans is that many companies make two critical mistakes: 1) they don’t do the math as to the size and frequency of the cash withdrawals by the lenders, and 2) they often find themselves going to the well again, taking out a second, third, fourth, or more MCA loans - a term referred to as “stacking.” Stacking results in a cascade of daily or weekly variable withdrawals from your small business bank account, resulting in you losing complete control over the Cash Flow you were trying to fix when you took out the advance in the first place. As a result, more and more businesses, who may have previously used a credit card or their own funds for working capital, are turning to MCA lenders. Merchant Cash Advances, or MCAs for short, have become attractive due to their quick application process and fast access to capital, with the approval not being so heavily dependent on your credit score.

Recently there’s been a dramatic increase in small businesses employing Merchant Cash Advances as a source for working capital funding. Invoice factoring grows along with your Company growth and is a short-term financing solution to provide your Company the working capital it needs today. The money the factor advances you is from your own invoices, and each advance is paid off when your Customer pays you 30 – 45 days later. With factoring, you don’t need to worry about a 10-year payback and monthly payments like a term loan.

Depending on the interest rate, you might end up paying back well over $200,000. Once you have the money from your loan, you can use it, but with interest compounded on top of the principal, you’re paying back much more than you took out. Even if you do get approved for the loan, you might not get approved for as much as you actually need, so it’s not quite a stopgap measure or a solution for your cash-flow problems. Even if you’re approved, you still only have access to a finite amount of capital that you’ll still have to pay back at some point (a loan is a loan, after all).

#Commercial invoice factoring free#

In addition, the Factor will perform free credit checks on current and future customers, helping the clients establish credit levels that are appropriate for each of their customers.With a loan from a bank, you’ll need to apply first and go through an approval process.

The Factor takes on the administrative and collection duties associated with those invoices,.

The Factor then immediately sends the invoices to the customers, and customer confirms that they will forward the payment to the Factor under the normal trade terms being offered,.

Factoring clients simply submit approved invoices, along with “proof-of-delivery” backup to the Factor, who will provide a sizable advance to the client within 24 hours (usually 80-95%),.

“Commercial Factoring” is where a “Factor” pays a commercial business an advance on their invoices (less a discount) and collects from the business’s customer. The credit card company pays the merchant immediately (less a discount) and then collects from the card holder.

Most of us are familiar with “Consumer Factoring”, which is what credit card companies do for merchant who sell items to consumers.