Follow these quick checklists to make sure your company, sales and invoices fit the criteria so that you qualify for invoice factoring and get approved for more working capital.
When the bank denies your loan, you have options. Invoice factoring (also called “accounts receivable factoring” or just “factoring”) could give you the funds you need in a very short time – sometimes as quick as within one day. But first, make sure this option is right for your business.
If you fit into this list of criteria, you could be approved for invoice factoring.
✓ You’re a B2B company, whether you are a small business or startup, a growing operation or an established enterprise.
✓ Your company provides a service or sells a product to other businesses rather than private individuals
✓ You don’t meet the standard list of requirements for a bank loan
✓ Your company’s credit rating may not be very high, but your customers’ credit is.
✓ You operate in an industry that has reliable customers that pay on invoicing. See a list of common industries below.
✓ You have sales on the books with dependable customers who are credit-worthy.
✓ You invoice your clients on credit terms.
✓ You have strong sales opportunities in the pipeline.
✓ You have credit-worthy accounts receivable that are very likely to be paid on their due date.
✓ Your customer invoices tend to have longer terms such as 30 or 60 days from the invoice date.
✓ Your invoices are free of liens and encumbrances.
✓ Your invoices are within credit terms and credit limits.
Getting approved for invoice factoring
There are plenty of advantages to using invoice factoring, aside from the obvious need for working capital. (If you’re ready to learn more, get a headstart and learn all the factoring terminology in our free Ultimate Factoring Encyclopedia.)
Your factoring company can provide back-office support and take care of collections for those accounts receivable, freeing up time to focus on your company. You’ll also obtain more working capital that can be used to purchase additional supplies and fulfill new orders, helping grow your business at a faster pace. And by working with the right company, you’ll gain a business partner that can provide broader financial analysis and support – so the process can continue at a scalable pace to meet your business needs.