![]() ![]() Conversely, you’ll have to give up a portion of your invoice value to get the funding. ![]() The biggest advantage of invoice factoring is that it’s a quick and easy way to get funding since there’s no application process or waiting period for approval. This means that you don’t have to worry about incurring debt or paying interest on the money you receive. Is invoice factoring a loan? No, it isn’t. With invoice factoring, you’ll typically receive around 70% to 80% of the invoice value up front and the rest when your customer pays the invoice. Invoice factoring is funding that allows you to sell your accounts receivable (invoices) to a third party at a discount in exchange for immediate cash. On the downside, however, loans can be more difficult to qualify for and typically come with higher interest rates. The biggest advantage of accounts receivable financing is that it’s a loan, so you don’t have to give up ownership of your invoices. With this type of loan, you can typically borrow up to 80% of the value of your invoices, and you’ll have to pay a fee for the loan, typically a percentage of the invoice value. Accounts receivable financing is also sometimes called invoice financing or receivables financing. What Is Accounts Receivable Financing?Īccounts receivable financing is a type of short-term business loan that uses your accounts receivable as collateral. This article discusses the most important things to know when it comes to accounts receivable financing vs. Both involve using accounts receivable as collateral, but there are some key differences that you should be aware of. Invoice financing and factoring are two methods that can provide a much-needed cash infusion to help you bridge the gap between when you deliver your product or service and when you receive payment. ![]() If you’re in the business of selling products or services to other businesses, you’re probably all too familiar with the challenge of waiting to get paid. ![]()
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