Tag: factoring companies

Factoring companies are a quick way for businesses to get cash from their outstanding accounts receivable.

How to Create an Airtight Business Disaster Preparedness Plan
Most small businesses think they’re prepared for disasters, yet just a quarter actually are, according to U.S. Chamber of Commerce Foundation research. Perhaps as a sign of the times, most businesses that aren’t truly prepared cite finances. Simply put, planning for emergencies is difficult when you’re worried about making payroll or covering other vital expenses. Even still, each business disaster planning step you take today has the potential to ensure continuity of operations and accelerate recovery tomorrow. Below, we’ll walk you through the steps involved in developing an airtight disaster preparedness plan or shoring up your existing plan, including budget-friendly options you can take right away.

The Importance of a Disaster Preparedness Plan for Small Businesses

People often think of worst-case scenarios regarding disaster preparedness, such as the likelihood of business closure following an incident. This is an important consideration, as 43 percent of small businesses do not reopen after a disaster, according to the Federal Emergency Management Agency (FEMA). An additional 29 percent close within two years. However, there are many reasons beyond business failure to develop a disaster recovery plan now.
- Financial Protection: The best time to obtain disaster recovery insurance is before you experience an incident. A good insurance plan will cover everything from property damage to liability claims and business interruption costs.
- Business Continuity: Around a third of businesses take six months or more to fully recover from an incident, per the U.S. Chamber of Commerce Foundation. More than one in ten takes over a year to recover. Effective planning helps you avoid these disruptions and recover faster.
- Cost Efficiency: By minimizing business disruptions and losses, your business will save money over time.
- Employee Welfare: A strong business emergency plan enhances employee safety. Your crisis management response is also one of the greatest factors in how employees cope with a disaster. A prepared business fosters trust and builds confidence, which will help minimize downtime and losses.
- Maintaining Customer Trust and Reputation: Certain industries are particularly sensitive to disruption. For instance, if you’re in an industry like trucking, manufacturing, oilfield services, staffing, or security, your clients will have greater confidence in your business if you’re prepared for disasters. You may also win more business if an event occurs and you’re better prepared for it than your competitors.
- Regulatory Compliance: Many industries have preparedness standards and laws, especially regarding safety, security, and privacy. Shoring up your plans can add a layer of legal protection to safeguard your business in the future.
Critical Components of an Effective Disaster Preparedness Plan

Each business will have unique emergency planning needs. As you develop yours, address the areas outlined below.
- Communication: Have a plan for sharing information quickly and clearly. Ensure the plan covers who is responsible for communicating with whom, when communication should occur, and the proper method of communication.
- Training and Drills: Train the team on their roles during an emergency and run drills to ensure the steps become second nature.
- Evacuation Plans: Outline the safest and quickest routes to exit the building, as well as emergency meeting points and procedures for ensuring everyone’s safety.
- Emergency Supplies: Develop an inventory of supplies and equipment that might be needed during an emergency. This includes things like fire extinguishers, medical kits, and communication devices.
- Emergency Funding: Understand the likely costs of addressing various scenarios and set aside savings or have a backup funding source like invoice factoring that can provide cash quickly.
- Security Protocols: Identify any security protocols necessary to protect people and your property during an emergency.
- Risk Assessment: Create a list of existing and potential dangers, identify the risk of an issue occurring, and predict likely outcomes if an event occurs.
- Planning: Work through as many emergency scenarios as possible to determine what needs to be done if an incident occurs.
Steps to Drafting Your Disaster Preparedness Plan

Now that we’ve covered the background let’s explore the steps involved in creating a disaster preparedness plan.

Step 1: Conduct a Risk Assessment

Identify and prioritize the risks that could impact your business operations. A few examples of typical risks are covered below.
- Technological Incidents: Power outages, fire, hazardous materials accidents, chemical/biological/radiological incidents, vehicle or aircraft crashes, etc.
- Weather-Related Incidents: Earthquakes, wildfires, extreme heat, tornados, winter storms, flooding, hurricanes, etc.
- Human-Caused Incidents: Civil disorder, vandalism, cybercrime, etc.
Once you have a list of potential emergencies, assess how likely your business is to be impacted by each one.

Step 2: Develop a Business Impact Analysis

Analyze how different types of disasters could affect your business and the financial impact. For instance, a winter storm could potentially cut power to the business, limit communication, create safety risks, and prevent people from getting to or leaving the business.

The anticipated costs will vary greatly from one business to the next. For instance, the 2024 CrowdStrike software glitch grounded airlines, shut down medical facilities, and paused banking, resulting in a net loss of over five billion dollars, CNN reports. Meanwhile, an Amazon outage costs the company more than $66,000 per minute, according to Forbes. Your figures are not likely to reach this magnitude, but understanding the potential cost of each event can help you prioritize various planning activities and allow you to focus on the most disruptive events first.

Step 3: Create Emergency Response Procedures

Emergency response planning focuses on how your business will protect people and minimize harm in the event of a disaster. For instance, a power outage can make navigating an office difficult, presenting injury risk for everyone inside. Your plan might involve having emergency lighting kick in, followed by managers performing sweeps of their departments and evacuating people to a safe area.

Go through your list of potential emergencies and identify how you’ll keep people safe during each one.

Step 4: Develop a Continuity of Operations Plan

Whereas the emergency response plan focuses on protecting people during an emergency, your continuity of operations plan (COOP) is dedicated to minimizing downtime. Ideally, your COOP will help you avoid downtime altogether. For instance, you might install a backup generator or alternate power source that allows you to continue operating even if your main power is cut. However, your COOP should also consider methods to get your business up and running fast if it is taken offline altogether. For instance, you might consider backing up your website or data to a secondary server to switch over quickly if the primary server is down.

Again, go through each item on your list, identify all the ways you can think of that would prevent your business from operating at full capacity, and brainstorm strategies to restore operations as quickly as possible.

Step 5: Train Employees and Test the Plan

Ensure your plans are documented and accessible. For instance, consider having written copies distributed to the team and stored in your building. Also, have digital copies that can be accessed via computer or phone.

Run drills with your team to help ensure everyone can fulfill their role without issue. Think of this like fire drills. The more often you do it, the faster and more fluid your team will become, thus ensuring things will go quickly and smoothly if there is ever an incident. These drills will also allow you to test your plan so you can make adjustments as needed to ensure your people and business are truly protected in the event of an emergency.

Strengthen Your Business Continuity Planning with Factoring

Having backup funding is crucial to business continuity planning, as it allows you to address issues quickly without waiting for approval or disbursement. Factoring is ideal because you can set it up in advance and not leverage it until you need it. Plus, same-day funding is available when you work with a company like Charter Capital, ensuring you have cash when it’s critical. Many businesses also leverage factoring as they’re putting preparedness plans in place, as it can provide a quick cash injection without creating debt. If you’d like to get set up with factoring services so your business is prepared, request a complimentary rate quote.
October 28, 2024
7 Tips for Choosing the Right Staffing Factoring Company
Staffing and recruitment is a $218.8 billion industry in the U.S., Statista reports. With around $100 billion in growth in just four years, it’s clearly experiencing quite a boom, too. However, cash flow challenges are common due to the nature of the industry, and you’re likely to see more gaps and fluctuations as your business grows. An experienced staffing factoring company can help you navigate these challenges, though finding one that understands what you’re working with on a daily basis isn’t always easy. We’ll walk you through the basics of factoring for staffing businesses and provide some tips to help ensure you find the right partner for your needs on this page.

Financial Solutions for Staffing Agencies Are Vital

Staffing companies can face up to an eight-week gap between the time they pay wages and a check from the client actually clears. Additional costs, such as marketing, recruitment, background checks, and often training, only add to this burden. These unique conditions can leave you with a significant cash flow gap even in the best of times. Challenges are even greater during periods of high demand and growth, which unfortunately leave many staffing firms unable to accept new clients or expand their contracts.

If you’re responsible for staffing business finance, navigating these challenges can seem like an uphill battle and traditional funding solutions often fall short. After all, you may not need funding all the time, and committing to a long-term financing solution with ongoing payments and interest can hurt your growth potential in the long run. That’s where invoice factoring comes in.

Invoice Factoring is a Multifaceted Solution

Factoring is a time-tested funding solution that works for newer and established staffing firms alike. It addresses cash flow problems quickly and on-demand without requiring a long-term commitment.

What is Factoring and How Does It Work?

Invoice factoring provides you with immediate payment on your B2B receivables. Rather than taking out a loan, you sell your invoice at a discount to a factoring company and receive up to 95 percent of the invoice’s value upfront. Your factoring company collects the balance for you, and then sends you the remaining balance minus a small factoring fee when your client pays.

The Staffing Factoring Process is Simple
- Send people to work. Operate like you usually do.
- Submit invoices or proof of work to your factoring company. You’ll invoice clients like you normally do. Depending on your agreement, your staffing factoring company may be able to advance payment based on timesheets or other documents that show work was performed. Otherwise, you’ll send your factoring company a copy of the invoice when you bill your client.
- Receive payment instantly. Most payments reach your account within a couple of business days. However, when you work with a staffing factoring company like Charter Capital, you can receive payment on the same day you invoice your clients.
- Move forward. Your factoring company will collect from your client to save you the time and trouble of chasing invoices.
- Receive final payment. You’ll receive the remaining sum minus your factoring fee when your client pays. There’s no debt or interest to pay back.
Factoring Benefits for Staffing Agencies

Staffing companies benefit from factoring in many different ways.

Working with an experienced invoice factoring company can significantly improve your staffing agency’s cash flow management. Such a company understands the unique challenges of the staffing industry and can provide tailored solutions that bridge the gap between paying your employees and receiving payment from clients. This partnership not only ensures you have the funds to cover operational expenses but also supports your growth by allowing you to take on more clients and larger contracts without financial strain.

Quick and Easy Approval

Factoring is not a loan, so it doesn’t come with the same rigid approval requirements. Most factoring companies can have you approved within a couple of days. However, Charter Capital expedites the timeline. You can receive your factoring quote and terms on the same day you apply.

Instant Payment

It can take weeks or months for clients to pay and loans to disburse. With factoring, you can receive your cash right away. Because of this, many staffing companies leverage it when time is of the essence, such as when payroll is due.

Cash Flow Stability

The unpredictable nature of the staffing industry and each subset can make it challenging to know when cash is coming in and budget. With factoring, you know exactly when money is coming in, so it’s easier to manage your money wisely.

Flexible Funding

Staffing factoring companies often create flexible and tailored agreements with the businesses they serve. For instance, you aren’t required to sign a long-term contract with Charter Capital. You also have control over which invoices you factor and how often you factor, which allows you to leverage it on a case-by-case basis when it makes the most sense for your business.

Back-Office Support

Collections are taken care of for you when you factor invoices. At Charter Capital, we also provide free client credit reports, so it’s easier to make educated decisions when extending credit to your clients through invoicing.

Types of Staffing Agencies That Use Factoring

There are around 25,000 staffing and recruiting companies across the country, according to the American Staffing Association (ASA). Most can leverage factoring.

Temporary Staffing and Recruitment

Although their cash flow needs and processes are different, both temporary staffing firms and permanent placement or recruitment firms routinely work with staffing factoring companies.

Administrative Staffing

Firms that provide secretaries, administrative assistants, executive assistants, call center attendants, data entry specialists, and more all regularly leverage factoring. It helps with day-to-day needs like recruitment, testing, and payroll.

Medical and Healthcare Staffing

Factoring is routinely used by healthcare companies that provide temporary placement of physical therapists, occupational therapists, registered nurses, doctors, and other licensed professionals to accelerate payment and make payroll easier. It also works well when placing auxiliary staff members, such as medical assistants and secretaries.

Finance Staffing

Finance staffing companies, such as those that work with controllers, CPAs, bookkeepers, and accounting clerks, routinely leverage factoring to address ongoing cash flow challenges and when expanding or taking on larger contracts.

Construction Staffing

Most construction staffing companies experience large seasonal swings. It can be difficult to ramp up and meet demand without access to working capital. Because of this, businesses that provide skilled and unskilled labor, covering areas like light industrial and forklift operators, often work with staffing factoring companies.

Security Staffing

Some factoring companies, such as Charter Capital, specialize in factoring for security firms. It’s especially helpful for bridging cash flow gaps when onboarding new clients or accepting large assignments.

7 Tips for Choosing the Right Staffing Factoring Company

Choosing a factoring company can seem a bit complicated. However, keeping the tips and questions to ask in mind that we’ll cover below will streamline the process and ensure you select a partner that genuinely supports your growth.

1. Confirm They Have Experience with Staffing Companies

Many factoring companies can serve staffing companies, but not all of them specialize in it or understand the nature of the industry. A factoring company that understands your business and its unique challenges will provide better service and be more instrumental in your growth.

Questions to Ask
- What is your experience with staffing businesses?
- How are the services you provide for staffing companies different from those you provide to businesses in other industries?
2. Get a Clear Breakdown of All Fees

Your primary expense with factoring is the factoring fee, which is usually between one and five percent of an invoice’s value. However, each staffing factoring company is different and may have additional fees beyond this. While it’s not always best to go with the cheapest service, as this can impact quality, speed of payment, and other concerns, you’ll want to select a company that’s transparent about all fees and offers competitive rates.

Questions to Ask
- What will my factoring rate be?
- Are there any additional fees or charges that may apply?
- Are there ways I can lower my costs?
- Do you require a reserve, and if so, how is it handled?
3. Check the Company’s Reputation and Client Testimonials

Examine the company’s reputation before signing up. Look for signs they’re committed to ethical practices and quality service, such as membership in the American Factoring Association or International Factoring Association. Read reviews and testimonials from their clients to find out if they really deliver on their promises.

Questions to Ask
- How long have you been in business?
- Are you a member of any professional organizations, and if so, which ones?
- Do you have client testimonials or reviews you can share with me?
4. Verify the Funding Process and Speed

Because the speed of payment is a crucial consideration for most staffing companies, you’ll want to make a point of inquiring about how they ensure payments are made quickly as needed.

Questions to Ask
- What are my payment options?
- How quickly are individual invoices approved for factoring?
- Are there additional fees for expedited service?
5. Analyze the Contract Terms Carefully

Always review your factoring agreement carefully before signing and confirm everything is in order.

Questions to Ask
- What happens if I decide to leave your factoring company tomorrow?
- What happens if you don’t meet our agreed-upon terms for speed of funding?
- What happens if my client doesn’t pay their invoice?
6. Ask About Your Advance Rate

Your advance rate, or the total amount of upfront cash received, will vary from one staffing factoring company to the next. Factoring advances typically range from around 60 to 95 percent. However, most staffing companies fall on the higher end of the spectrum, meaning you are likely to receive 90 percent or more of an invoice’s value upfront. The average length of time it takes your clients to pay, factoring volume, concentration, and other considerations will be taken into account when this figure is determined. While high advance rates are typically ideal, remember to ensure you’re balancing amounts with speed and cost.

Questions to Ask
- What will my advance rate be?
- Are there ways to increase my advance rate when needed?
- How do other factors I have control over, such as volume, influence my rates?
7. Get information About Support and Additional Services Offered

Factoring companies with experience supporting the staffing industry often tailor their approach or offer additional services that can help your business grow. Identifying these benefits in advance can make it easier to choose between factoring companies.

Questions to Ask
- Will I have a dedicated account manager? If not, who will I speak to when I have questions or need help?
- How are my invoices and payments tracked, and will I have access to data on demand?
- How does your team handle the invoice collection process?
Work with an Experienced Staffing Factoring Company

If invoice factoring sounds like the ideal solution for your staffing company’s funding needs, work with an experienced specialist who can help you maximize the benefits of factoring while helping you manage costs effectively. With decades in the industry and dedicated staffing factoring support, Charter Capital can help you bridge cash flow gaps and grow. To learn more or get started, request a complimentary factoring rate quote.
March 4, 2024
Our 7 Favorite Things About Factoring

If your business needs to accelerate customer payments, experiences cash flow gaps or faces unexpected expenses, invoice factoring can be a lifeline. It’s a form of alternative business funding that allows you to sell your unpaid receivables at a discount to a third party and receive instant payment. Most businesses are approved, even if they’re newer or don’t qualify for a loan, because factoring doesn’t rely on the same rigid criteria that banks use. This makes it a very unique funding solution, but it’s only the start of what sets it apart. On this page, we’ll share seven of our favorite things about factoring so you can better understand how it works and how it might benefit your business.

1. You Receive Immediate Access to Capital

Around a quarter of small businesses have less than a 13-day cash reserve, according to JP Morgan. In these situations, something as small as a single late customer payment or unexpected expense can make it impossible to cover critical expenses like payroll and inventory.

Most traditional funding solutions are not designed for these kinds of situations. It can take weeks to get approved. Months may pass before the business receives the payout. Invoice factoring is different. If you’re diligent with documentation, your initial approval will usually arrive within days, if not sooner.

Moreover, businesses typically receive their advances within two business days, deposited directly into their bank accounts. You may also qualify for same-day payments when you work with a factoring company like Charter Capital. Because factoring offers immediate access to capital, it’s often the best funding solution for businesses that need a quick injection of capital to maintain normal operations or bid on a project.

2. Your Business Doesn’t Accrue Debt

Although debt can sometimes be helpful, particularly when it empowers the business to grow and boost its credit score, issues relating to debt management have been increasing in recent years. Around one-third of small businesses say making debt payments is a challenge, according to the latest Small Business Credit Survey. Close to two-thirds indicate their business is in fair or poor financial condition.

Invoice factoring doesn’t create debt. The advance is paid off automatically when your customer pays their invoice. You’re free to move forward without worrying about making extra payments and may even improve your credit score due to the increased ability to make timely payments.

3. It Improves Customer Credit Management

Slow and delinquent payments are a common issue for small business owners. Around ten percent of payments are either never paid or paid so late that the business has no choice but to write them off as bad debt, CPA Practice Advisor reports. It’s more than a nuisance. These issues impact your ability to make payments and increase time spent chasing invoices. Research also shows that business borrowing increases with slow and late payments, per Insightful Accountant. This means the payment behaviors of your clients directly impact your debt and overall financial health.

Thankfully, factoring addresses these issues in a couple of different ways. First, your factoring company runs credit checks on your clients before factoring invoices. You learn how much credit you can extend to each client without exposing your business to unnecessary risks. Secondly, your factoring company collects the balances for you, so invoices are typically paid much quicker. You’re far less likely to have to write balances off as bad debt, too.

It’s also worth noting that you don’t have to change your payment terms to achieve these benefits. If giving your customers a longer payment window helps you maintain stronger relationships or win more bids, you can keep doing this and still benefit from improved cash flow.

4. You Gain Financing Flexibility

Factoring helps keep businesses agile. You can use it as needed for virtually any situation. For instance, some leverage it to fill cash flow gaps as their business grows, while others factor invoices as they ramp up to meet seasonal demands or fulfill larger orders.

It’s also one of the few funding solutions that automatically scales with your business. As your invoice values or volume rises, your access to capital rises with it. Plus, you can use it when you want. You don’t need to factor all your invoices or factor all the time, so you have more control over your cash and how you put it to work.

5. It Fuels Growth

Capital from invoice factoring can be used to fund growth-related initiatives such as business expansion, launching new products, and marketing campaigns. Charter Capital clients have achieved significant results through factoring, such as doubling their client base and growing 56 times bigger in just a few years, case studies show.

6. It Gives You Time Back

More than two-thirds of small businesses spend 14 hours each week on administrative tasks related to collecting payments, QuickBooks research shows. Because your factoring company collects for you, your company gets much of this time back. Put it toward growth-related activities, customer-focused tasks, and more.

7. You Gain an Experienced Partner

When you work with an invoice factoring company like Charter Capital that knows your industry, you gain an experienced partner who can help your business reach new heights. Your team may be able to help you address growing pains, provide financial advice, provide additional services, and link you up with other pros who can streamline your operations and grow a stronger company.

Maximizing Business Growth with Invoice Factoring

When it comes to business, achieving a steady cash flow and immediate access to capital are critical factors that drive growth and operational efficiency. Invoice factoring, a powerful form of accounts receivable financing, stands out as an essential tool for businesses aiming to bridge the gap between billing and payment periods. By leveraging factoring services, companies can instantly convert their accounts receivable into working capital, providing a lifeline to improve liquidity and fund expansion without incurring debt. Factoring allows businesses to sell their outstanding invoices to a factoring company at a discount, thus receiving immediate funds usually within 24 hours. This process improves cash flow and reduces overhead costs associated with chasing down payments, thereby improving operational efficiency. One of the advantages of factoring accounts is its ability to provide flexible financing solutions that adapt to the company’s growth, unlike traditional loans, which might involve lengthy approval processes and monthly payments.

Furthermore, factoring offers a strategic advantage for businesses in need of short-term cash solutions. It benefits businesses by alleviating the burden of debt collection and improving credit management. Factoring companies assess the creditworthiness of your customers rather than your business, offering a unique form of financing that can be particularly beneficial for new businesses or those with less-than-perfect credit. Non-recourse factoring further enhances this benefit by protecting businesses against the risk of customer default.

Factoring services also contribute to a business’s competitiveness in various industries by ensuring liquidity is available to pay invoices, purchase inventory, and even take on new projects. For example, businesses like security guard firms can benefit from security factoring, which helps maintain steady cash flow despite delayed payments from clients. The immediate cash provided through factoring can help companies manage their balance sheets more effectively, fund significant portions of their operations, and utilize immediate funds to meet their short-term needs. It’s a transaction that facilitates immediate payment on outstanding receivables and offers a pathway to growth and financial stability without relying on traditional debt financing.

Learn more about the benefits of factoring and how factoring can help companies to not only survive but thrive in today’s competitive market. Factoring provides a non-traditional loan alternative that improves cash flow, enhances liquidity, and supports business expansion. Contact Charter Capital to discover how factoring works and to explore a factoring agreement tailored to your business’s unique needs. Factoring helps businesses pay their invoices on time and continue their journey toward success without the financial strain tied up in unpaid receivables.

Request a Free Charter Capital Invoice Factoring Rate Quote

With decades of experience, experience across a wide variety of industries, and competitive rates, Charter Capital can help your business reach the next level through invoice factoring. If factoring sounds like the ideal business funding solution for your needs, request a free rate quote.

December 27, 2023
QuickPay vs Factoring: What’s the Difference?
Creating consistent cash flow as a carrier in the trucking industry is a complex and often challenging task. As an experienced trucker, you’re familiar with the routine: you complete a job by moving a load, then immediately have expenses such as fuel, vehicle maintenance, insurance, and various other operational costs. These expenses accumulate steadily while you’re out on the road. Often, amidst the hectic schedule of a truck driver, it might take several days before you can sit down to process and send out an invoice for the job you’ve just completed. Once the invoice is sent, the waiting game begins. You might find yourself in a position where you’re waiting 30, 60, or even more than 90 days to receive payment for your services. This delay in payment can create significant financial strain and uncertainty, particularly for small or independent trucking companies.

Given these challenges, it’s not uncommon for carriers to start exploring different financial solutions. Many truck drivers and trucking companies begin to consider options like bank loans or alternative methods to accelerate the receipt of load payments. This is where the concepts of freight factoring and the quickpay option often come into the discussion. However, understanding the nuances of these financial tools and determining which one is most suitable for your specific needs can be daunting.

At Charter Capital, we understand these challenges, which is why we offer both freight factoring and quickpay options to our clients. Our goal is to provide truckers and trucking companies with viable financial solutions that align with their unique business needs and cash flow requirements. We believe in full transparency and have no interest in pushing one option over the other. Our primary concern is ensuring that you, as a carrier, find the most effective financial solution to maintain and grow your business. Below, we will delve into both freight factoring and quickpay, helping you make an informed decision that best suits your trucking business.

What is QuickPay in the Trucking Industry?

Quickpay is a cash flow accelerant that some brokers offer. Instead of waiting for an extended period for payment, the broker offers cash advances to carriers through a process known as Quick pay. This system allows carriers to receive funds in exchange for a discount on the total invoice amount. The discount percentage can vary, typically ranging between one and five percent of the full invoice value. Plus, the timeframe for receiving these payments also differs among brokers. While some offer same-day funding, making quick pay an attractive option for immediate cash flow needs, others might take several days to a week or more to process your payment.

Quick pay for truckers is especially beneficial, as it provides them with the financial flexibility they need to maintain operations without the burden of waiting for delayed payments. This system is crucial because many brokers themselves face cash flow challenges. They often find themselves in a predicament, waiting for shippers to settle their dues while simultaneously needing to cover the unpaid invoices from carriers. Charter Capital’s Quick Pay services are designed to bridge this gap effectively. By using Qquickp Pay, truckers can get paid within a much shorter timeframe, alleviating the financial stress associated with delayed payments and helping them manage their cash flow more efficiently. This service offers a practical solution for truckers to maintain their financial stability and focus on their core business activities without the worry of prolonged payment delays. We offer factoring services for freight brokers and can quickpay their carriers.

Benefits of Quickpay
- Speeds up your cash flow by offering a payment option that covers operating expenses more efficiently.
Drawbacks of Quickpay
- Some brokers only offer it, so if you rely on it, you might wind up accepting low-paying loads to ensure you can work with a broker who does.
- The percentage fee will vary, which may make it hard to predict expenses.
- The fees can add up, cutting into your income.
- The broker knows you’re tight on cash and may try to negotiate for lower rates.
How Does Invoice Factoring Work?

Recourse and non-recourse factoring are cash flow accelerants that factoring companies offer. This is a one-on-one relationship in which the factoring company purchases your invoice at a slight discount, provides you with immediate payment, and then collects payment from the broker. Like quickpay, the rate varies anywhere from about one to five percent of the invoice’s value. You can also generally choose between getting paid right away or waiting a few days.

With non-recourse factoring, you won’t be on the hook for paying the balance back if the broker doesn’t pay. With recourse factoring, you could be. However, this is rare because factoring companies perform credit checks on the brokers to determine their creditworthiness before an invoice is accepted. If a particular broker’s invoices don’t qualify, it’s likely because their ability to pay is in question. That helps you weed out potential non-payers too.

Benefits of Factoring
- Your cash flow is much faster. You can receive cash within 24 hours.
- Can potentially work with every broker you move loads for.
- Allows you to choose which invoices you get advances on.
- Relieves you of managing your accounts receivables.
- Helps you gauge the creditworthiness of brokers.
- May come with perks like fuel cards.
Drawbacks of Factoring
- It is generally slightly more expensive than quick pay fees due to the additional services provided, but you can shop around for a good rate.
Charter Capital Offers Additional Benefits

If you’re considering accounts receivable factoring for trucking, Charter Capital can help you even more. We offer:
- The highest advance rates in the industry.
- No application fee or hidden fees.
- A streamlined application process with very little paperwork and fast approval.
- Dedicated account managers who care about your success.
- Comprehensive reporting.
Get a Complimentary Quote

Quickpay is a good option when you need fast payment after a load, but if your broker doesn’t offer it, you appreciate the additional benefits associated with factoring, or you want to see if you can get a lower rate by factoring, you owe it to yourself to find out more. Get started with a complimentary quote from Charter Capital.
March 8, 2021
Important Questions to Ask Before Signing a Factoring Agreement
Invoice factoring is a great way to get immediate cash flow, but much of your experience depends on the factoring company you choose. We’ll explore the basics of the factoring process below and highlight a few questions you can ask as a small business owner to help ensure you choose the best invoice factoring company and build a stronger business in the process.

Familiarize Yourself with Invoice Factoring Before You Begin

Known interchangeably as accounts receivable financing, invoice factoring is a distinct mechanism compared to other business funding solutions and transactions. Instead of waiting weeks or months for clients to settle their outstanding invoices, invoice financing companies can purchase your invoices and disburse the cash instantly

How do factoring companies make money?

Factoring companies usually only advance a portion of the invoice’s value upfront. The amount varies depending on your industry and other considerations, but it’s usually between 80 to 90 percent and can be even higher for transportation and staffing industries. When your customer pays the factoring company for the invoice amount, the factoring company deposits you the remainder, minus a factoring discount fee, which the company retains as payment for their services.

What is a factoring fee?

Factoring fees are usually represented as a percentage of the total invoice value. The amount charged will typically be a few percent. However, factoring rates vary based on the factoring company you choose, how long it takes your customers to pay, and how large your company is. Depending on the circumstances, some of the factoring fees at Charter Capital can even be lower than one percent. If you’d like a detailed breakdown of how much invoice factoring costs and how factoring fees are calculated, refer to our factoring cost breakdown for small businesses.

Do banks do factoring?

Banks are geared toward providing loans, which earns them payments for fees and interest. Since factoring isn’t a bank loan—you don’t borrow and don’t have a debt to pay back—it’s not a service banks typically provide.

Get to Know Each Factoring Company

Factoring companies all work a bit differently. You can do a bit of research before you connect with one to determine if your time will be well spent.

What kind of reputation does the factoring company have?

The best source of information is often customer testimonials when it comes to gauging a factoring company’s reputation. Have a look around the net to see what people are saying about any firm you’re considering. At Charter Capital, we make it easy by sharing factoring reviews on our website.

What services do they offer?

Even if a company’s sole focus is invoice factoring, they may provide additional services to help you build a stronger business. For example, Charter Capital offers fuel cards to freight factoring clients. Similarly, companies specializing in staffing factoring can provide tailored solutions to help staffing agencies meet their unique payroll funding challenges, ensuring consistent cash flow for weekly or bi-weekly obligations. For businesses in the security industry, specialized solutions like factoring for security companies ensure consistent cash flow to meet operational needs such as payroll, enabling companies to thrive in a competitive market.

By partnering with the right factoring company, businesses in various industries can access not only cash flow solutions but also industry-specific perks that simplify operations and support growth.

Top 10 Questions to Ask Prior to Signing a Factoring Agreement

Getting answers to the right questions before signing a factoring agreement will help ensure you choose the right one and know what to expect. Ask the ten questions below to any factoring company you’re considering so it’s easy to see which one is right for you.

1. How quickly can I get funding?

The timeline is different for each company, though a few business days is fairly standard. Charter Capital provides same-day funding upon request.

2. What kind of customer service do you offer?

It’s easy to feel like a number when you work with a large factoring company. However, you’ll have a dedicated account manager when you partner with Charter Capital. This person will be your main point of contact and will assist you as needed on an ongoing basis, so you’ll be working with someone who’s not only a factoring specialist but who also knows you and your business well.

3. Does the factoring company provide credit protection?

The level of credit protection you receive will vary from one company to the next too. At Charter Capital, we are interested in the creditworthiness of your customers, so we perform credit checks on them to verify they’re creditworthy in advance. That way, the likelihood of non-payment default due to bankruptcy is diminished, your cash flow remains steady, and your credit is protected.

4. How much is advanced?

Factoring companies usually advance 80 to 90 percent of an invoice’s value, which can be even higher for transportation and staffing. Naturally, the greater the advance, the bigger the cash flow boost your business receives.

5. What are the rates and fees?

Factoring fees covered earlier are only one expense a factoring company may charge. While Charter Capital makes a point of providing transparent pricing, be on the lookout for commonly hidden fees such as:
- Application and Startup Fees
- Servicing Fees (Also Called Administrative or Maintenance Fees)
- Invoice Processing Fees
- High ACH and/or Bank Wire Fees
- Monthly Minimum Fees
- Audit Fees
- Minimum Fee Per Invoice
- Check Clearing Days
- Termination Fees
- Penalties
These types of fees can make an otherwise low appearing factoring rate much more expensive than it would otherwise appear.

6. Do you manage accounts receivable for me?

It’s usually a nice benefit when a factoring company handles your accounts receivable for you because it frees you from chasing payments. It’s even better if they offer perks to your customers, like multiple payment options, as it boosts customer service. Also, make sure to discuss what type of contact the factoring company will have with your customers. Check the factoring company’s reviews and make sure you are comfortable that any customer contact will be handled in a professional way.

7. How are credit checks carried out?

If the factoring company runs credit checks on your customers before accepting their invoices, find out what the process is like. At Charter Capital, the process is quick and free, but this isn’t always the case with other companies.

8. What are the invoice factoring requirements?

The terms will vary for each company. Find out whether you can choose which invoices you want to factor, or if you’re required to factor all your invoices. You may also need to ask this on a per-client basis, whether you’ll need to factor all invoices for a specific customer or if you can choose only certain ones.

9. What is the contract period?

Some companies tie you into long-term contracts. Make sure you understand what your obligations are and choose a company that fits your needs.

10. What other services and support do you offer?

Dedicated account managers and free credit checks are things Charter Capital offers to all our clients. We also have industry-specific perks. For example, trucking companies may qualify for fuel advances and fuel cards. Freight brokers can do carrier Quick Pay too. Always ask what other services a factoring company provides, so you can maximize the benefits and get the most out of your relationship.

Connect with Charter Capital and Get a Free Rate Quote

If you have any remaining questions about factoring, factoring agreement, or how Charter Capital can help, our team is happy to assist. Simply provide us with a few details about your business, and we’ll be in touch with a complimentary rate quote promptly. Begin your journey with us now, and discover how invoice factoring services can provide cash flow solutions and maximize the benefits of factoring for your business.
January 18, 2021
Raising Capital with Invoice Factoring

In the quest of raising capital for business, small businesses often face hurdles and disappointments. The business landscape is littered with small business owners who’ve stumbled in their search for capital. Many requests are denied and those who can secure more traditional forms of funding, frequently have unacceptable strings attached. Some financial deals come back to bite the business owner in the form of substantial debt, insufficient revenue share or worse.

Raising business capital is difficult and time-consuming, and most small businesses fail because they run out of cash. Getting additional capital in smaller chunks through a factoring fund will get you the cash your business needs without risking a loss of equity or ownership.

Invoice Discounting: A Factoring Service for Business Cash Flow Improvement

Small businesses, particularly, find invoice discounting a viable solution to common working capital challenges. This approach, factoring accounts receivable, has emerged as a powerful tool for startup capital raising, helping businesses access cash quickly and efficiently.

Invoice discounting may be the answer to many business cash flow issues. Gaining in popularity, invoice factoring (also known as Accounts Receivable Financing) is the practice of selling your accounts receivable (invoices) at a discount to a specialized invoice factoring company like Charter Capital. You get the money from Charter Capital and we help you collect on the factored invoices.

The reason many businesses make this move is to ensure the continuous flow of cash to the business without sacrificing equity or incurring debt. Essentially, businesses that use factoring services focus on having most of the money now rather than all of it later. It can take time to collect on an invoice, so when a company finances its accounts receivable through invoice financing, they are getting their money faster and without the hassle of the collection process.

Small Business Working Capital: The Impact of Factoring Invoices

Factoring invoices has become an attractive option for many, freeing up working capital for small businesses, improving cash flow, and allowing them to meet financial obligations promptly, all without traditional funding challenges. By leveraging this strategy, small to mid-sized businesses can bridge the gap between billing and payment cycles, ensuring smoother operations and bolstering growth. The money can be invested in new equipment, used to pay bills, or used toward payroll.

Industries with extended payment cycles can significantly benefit from invoice factoring. For example, oilfield factoring enables oil and gas service companies to turn their unpaid invoices into immediate cash. This boost in cash flow allows them to invest in new equipment, cover operational expenses, and take on larger projects without the financial strain of waiting for client payments.

Moreover, small business invoice factoring pairs well with other types of funding, allowing companies to develop a tailored strategy that fits their needs. For instance, some businesses, especially those that manufacture or distribute physical goods, are better able to fulfill large orders and maintain steady cash flow simultaneously by combining factoring with purchase order financing.

The lesson here is: Access to cash today through raising capital tactics like invoice financing is better than dashed dreams tomorrow.

November 20, 2020
6 Ways to Compare Factoring Companies & Find the Best One

Getting ready to compare factoring companies? As with any financial product, it’s essential to become familiar with factoring and how terms differ from one provider to the next. Below, we’ll break down some of the most-asked questions people have when comparing factoring companies, areas to explore with each factoring company, and traits to look for as you make a decision.

Getting Started

Factoring can give your business an immediate cash injection by tapping into your unpaid B2B invoices. Often thought of as a type of accounts receivable financing, invoice factoring differs in that you’re not taking out a business loan, but rather, are essentially selling your unpaid invoices to the factoring company at a discount. After the factoring company pays you, they assume responsibility for collecting payment from your customer. That in mind, you can think of it as a no-debt cash flow solution intended to help with your organization’s short-term needs.

Do banks do factoring?

Banks offer accounts receivable financing, but they don’t generally offer invoice factoring services. Instead, they usually provide loans that leverage the invoices as collateral. You’re still responsible for chasing your invoices and you’ll pay the bank back over time with installments that include interest.

Can you have more than one factoring company?

You can only work with one factoring company at a time. The reason is fairly obvious—if multiple companies wind up giving you funds for the same invoice, untangling who gets paid would be a mess. This aspect is governed by the Uniform Commercial Code (UCC) which stipulates that a factoring company must file a UCC-1 financing statement when you enter into an agreement with them. The form essentially says that, as a financial institution, your factoring company has an interest in your “property,” which, in this case, is your invoices. It prevents other financial institutions from claiming rights to them. If you decide to switch factoring companies somewhere down the road, you can, but the new company needs to coordinate with you and your old company and file a new UCC-1.

Compare Each Factoring Company as a Business

Before breaking down the packages you’re being offered, evaluate each factoring company on the whole. Make note of details that distinguish the company, itself, from competitors, and whether they lead the pack with customer-friendly practices.

1. How long has the factoring company been in business?

Companies that stand the test of time usually have good track records for success and provide better factoring services. This is essential for you and for your customers, as the factoring company will become the face of your business in terms of collections. Reputable factoring companies have a long-standing history and proven track records, ensuring reliable service for your business.

2. Does the factor have clients in your industry?

Industry-specific expertise can ensure you’re getting a financial product that’s tailor-made for your niche and that the company understands your unique concerns. Oftentimes, invoice factoring companies specialize in a few key areas and build comprehensive solutions to serve that niche.

Industries like oil and gas have unique financial needs due to long payment cycles and substantial operational costs. Choosing a factoring company that offers oilfield factoring can provide specialized services tailored to these challenges. Such companies understand the intricacies of the oil and gas sector and offer solutions that improve cash flow, allowing your business to thrive even amidst industry-specific hurdles.

For example, one area Charter Capital specializes in is trucking and freight factoring. It means our representatives understand what carriers and freight brokers need, common payment terms in the industry, and provide other helpful services, such as fuel cards. There are unique features and benefits for each industry we support.

3. Can they handle your sales volume?

Factoring companies come in all sizes. Some may not have the ability to support your needs and you don’t want to find that out when you’re struggling with a cash flow issue and counting on your factoring company to come through. It’s also worth noting that you’ll generally pay less the more you factor, so selecting a company that can handle your sales volume can help ensure your costs stay low too.

4. Does the factor require minimum factoring fees?

Some companies tie you in with monthly minimums. For example, they may stipulate that you pay a certain amount each month regardless of whether you factor, or they may require you provide them with a certain volume each month. Small-business owners may look at these terms and think they’re doable, only to find their cash flow issues are reduced down the line and wind up paying for services they don’t really need.

5. Does the factor require a long-term commitment?

Don’t sign onto long-term contracts unless you really need to. As mentioned above, you may not need to factor for an extended period of time. Lots of businesses factor just to get through a seasonal lull, to get through an economic crunch, or to deal with an unexpected issue. Work with a company that lets you factor only the invoices you need to factor when you need to factor them.

6. Are the factor’s advance and fee structure competitive?

Get a general idea of advance rates and fee structures to ensure the company is competitive as a whole. For example, you’ll typically see advance rates ranging from 70 to 90 percent the invoice value and fees between one and five percent of the invoice value.

Pick the Best Factoring Company by Comparing Key Features

Once you evaluate factoring companies, you’ll want to take a look into the specifics of the package or product each of your leading choices offers. The best factoring company for your needs is likely to stand out.

Recourse vs non-recourse

Find out who is responsible if a customer doesn’t pay their invoice. Your factoring company will examine your customer’s creditworthiness, and thus likelihood of paying, prior to agreeing to factor an invoice, so non-payment is rare. However, in the event someone does skip a bill or go bankrupt, you’re ultimately responsible for their debt with recourse factoring. With non-recourse factoring, the factoring company assumes responsibility for the debt, though it’s usually in exchange for higher fees and/ or reduced advance rates.

Flexibility

Watch out for minimums and long-term contracts. Factoring is generally thought of as a short-term solution. Although large well-established companies may use it from time to time to avoid taking on debt while sorting out a cash flow issue, it’s more often leveraged by small and midsize businesses that eventually solve their cash flow issues or move onto bank-supplied solutions like lines of credit and term loans. If you’re tied into a minimum or a long-term contract, you could be forced to keep paying even when the model no longer suits your needs.

Factoring fees

Get an estimate to determine your actual rates so you can do a proper comparison. A lot of companies say they offer factoring fees of two percent or less, but your actual factoring fees will depend on a number of things, such as volume and the creditworthiness of your clients. You may not qualify for two percent even if its advertised. The same is true of advance rates.

Funding time

Find out how quickly you’ll get your cash and if there are additional fees for expedited service. Whereas some factoring companies offer same-day funding, others can take several days to a week or more.

Perks and value-added services

Explore what other benefits you qualify for by partnering with a company. As mentioned earlier, fuel advances are one way Charter Capital helps our trucking and freight clients. We also provide perks like free credit checks on your customers, 24/7 account access, and a dedicated account manager for clients in every industry, as well as other industry-specific perks.

Get a Free Rate Quote

As a leading recourse factoring company, Charter Capital provides competitive rates, flexible funding, same-day payment, and a wealth of perks, all with no long-term contracts. Explore how Charter Capital can help your business with a free rate quote.

September 30, 2020
Was 2019 Just a Pothole for Trucking? Or Something More?

Was 2019 Just a Pothole for Trucking? Or Something More?

Nearly 800 trucking companies failed in 2019, taking almost 25,000 trucks out of the industry’s capacity. Is this a sign of things to come? Or is it an overdue correction?

Celadon Group, by far, represented the biggest name to fall last year when it filed for bankruptcy in December 2019. The Indianapolis-based trucking firm’s demise was the largest in industry history. No surprise, as Celadon was one of America’s 10 biggest trucking outfits at the time. When it closed, more than 2,800 drivers hit the road not with a load to deliver, but a pink slip. Another 1,300 support staffers also lost their jobs.

Ten months earlier, New England Motor Freight shuttered, putting its nearly 1,500 truckers out of work. The company blamed labor costs, excessive regulation, toll increases and insurance rates for its decision to close. Other major carriers that went bust in 2019 included New England Motor Freight, HVH Transportation, Cold Carriers, Falcon Transport and LME.

To be fair, trucking had a banner year in 2018, so anything less than a repeat performance was bound to be a disappointment. A downturn may have even been inevitable. Some believe, even with a driver shortage, there was simply too much capacity in the market. When demand slipped a little in early 2019, it didn’t take much for companies operating with razor-thin margins and little room for error to crack.

But even big companies are hurting. Such industry stalwarts as J.B. Hunt, Knight-Swift and Schneider have revised their outlooks downward. This comes amid news that freight volumes have dropped since reaching a high for 2019 last May. The Cass Freight Index shows shipments in December 2019 at a low last seen in February 2016.

It sure seems like things are bleak. But is this grim view justified?

The United States has entered new trade deals with Canada, Mexico and China. The latter agreement puts an end to a trade cold war between the two giants that has had markets on edge. These trade deals could now spark new demand for equipment, machinery and consumer goods, all of which would absorb excess trucking capacity. Combined with the weaker trucking firms going out of business in 2019, reducing the number of rigs available, rates and revenues should increase, helping boost the industry overall.

No one can predict the future with absolute certainty. While there’s a lot of glum faces in trucking today, there are indicators that better times could be just around the corner. You just have to look for them. Keep in mind that bad news almost always makes for better headlines and generates more clicks. Sometimes you have to read between the lines to get the clearest picture of what lies ahead. Two facts are certain in good times and in bad: Things need to be transported and there’s no more popular or efficient way of getting goods from place to place than trucking.

Is your trucking company currently struggling with cash flow waiting for the turnaround to begin? Do you need the funds presently tied up in outstanding invoices? There is a solution available now. This solution lets you keep on trucking with invoices paid and cash flow problems now in the rearview mirror.

It’s called invoice factoring. With this type of alternative business funding, the factoring company advances you funds in exchange for your accounts receivable invoices. The factoring company pays you right away for your outstanding invoices and takes care of collecting on them from that point forward, freeing you of the troublesome and time-consuming chore.

Invoice factoring is also quick – you can usually get paid within just a day or two instead of waiting the usual 30, 60, 90 days or more. Utilize invoice factoring as often as needed to keep your cash flow running as smoothly as your fleet on a wide-open, traffic-free road. Invoice factoring is a convenient alternative to traditional bank loans or fee-laden online loans. To learn more about how factoring companies work, simply call toll-free 1-877-960-1818

February 4, 2020
Optimized Cash Flow Solutions with Factoring
Trucking is a race against the clock. As every truck driver knows, the constant pressure to navigate traffic snarls, avoid highway closures, overcome mechanical problems, and stay awake and alert to deliver their load at the contracted time is only part of the story. Another critical element that keeps the wheels turning is effective cash flow management.

Tackling Cash Flow Challenges in the Trucking Industry

Just as the driver’s truck runs on diesel fuel, the owner’s company runs on business cash flow. Whenever a customer is slow to pay their invoice, it’s a troublesome pothole in the trucking company’s cash flow. Get enough of these slow-payers, and the result is the trucking firm’s ability to pay its own bills, expenses, and its employees can grind to a halt.

For many trucking companies, freight bill factoring provides a reliable solution to these cash flow challenges. By converting unpaid invoices into immediate cash, factoring ensures that trucking firms can manage operational costs and keep their fleet running, even when clients delay payments.

With that said, factoring is not just a solution for trucking, it plays a critical role in staffing, helping agencies cover payroll while waiting on client payments, as well as in security firms, ensuring operational stability for contracted services. It is also widely used in industries like oil and gas, where businesses rely on factoring to manage cash flow fluctuations and sustain operations. These examples highlight factoring’s versatility as a financial tool across multiple industries.

Cash Flow Small Business Problems and Solutions

Smaller trucking companies are especially at risk of cash flow management challenges problems. They have fewer trucks on the road, so the small profit margins prevalent throughout the industry hit them harder. A two- or three-truck operation can face real trouble when one of those trucks breaks down unexpectedly. Add several slow-paying customers into the mix, and suddenly the firm is confronting a severe cash flow problem at a time when they need funds the most.

Factoring Cash Flow: An Effective Solution for Slow Payments

Has this happened to your trucking company? Is your collections department currently struggling with slow-paying customers not taking care of their invoices in a timely manner? Are you looking for cash flow management solutions that will enable you to improve business cash flow and keep cordial relations with your customers, and avoid late payments or noncollectable accounts?

Real-World Use Case: How Freight Factoring Keeps Fleets Moving

Delayed broker and shipper payments can leave small trucking operations in a financial bind, especially when critical costs like fuel, payroll, and maintenance can’t wait. That’s where freight factoring becomes more than just a cash flow tool; it becomes an operational lifeline.

Example Scenario

A three-truck fleet hauls loads across multiple states, with weekly fuel expenses exceeding $6,000 and driver payroll due every Friday. When a major broker pays on a 45-day cycle, the fleet owner risks missing payroll and fuel deadlines.

How Factoring Helps

By factoring their unpaid invoices, the fleet receives cash within 24 hours. This immediate funding covers:
- Fuel cards to keep trucks fueled and routes on schedule.
- Driver wages paid on time to retain talent.
- Preventive maintenance to avoid costly breakdowns.
Instead of tapping into reserves or taking on debt, the owner leverages the broker’s credit to meet operational needs without delay. This use of factoring turns static receivables into working capital that keeps the business running and growing, load after load.

Cash Flow Improvement Through Invoice Factoring

The good news is such a solution exists that lets you keep on trucking with invoices paid and cash flow problems now in the rearview mirror. Cash flow factoring, also known as accounts receivable financing, is your ticket to improve cash flow and navigate the financial gaps in your trucking business.

Factoring your invoices is one of the best cash flow management solutions for improving your accounts receivable turnover ratio. With this type of alternative business funding, the factoring company advances you funds for your accounts receivable invoices. The factoring company pays you right away for your outstanding invoices and takes care of collecting them from that point forward, freeing you of the troublesome and time-consuming chore of payment collection. Invoice factoring is also quick – you can usually get paid within just a day or two instead of waiting the usual 30, 60, or 90 days or more.

The Benefits of Business Factoring and Improved Cash Flow

Factoring companies can get you the money you need when you need it… with no long-term obligations. Gone is the worry and hassle of slow pay collections, bad debts, and doubtful accounts. Instead, you’re now free to run your business, to buy new equipment, hire new employees, expand operations, pay bills, or whatever else you choose. And, best of all, invoice factoring isn’t a one-time solution.

You can utilize invoice factoring as often as you need to keep your cash flow running as smoothly as your fleet on a wide-open, traffic-free road. Invoice factoring is a convenient alternative to traditional bank loans or fee-laden online loans. To learn more about how factoring companies work, simply get in touch.
October 22, 2019
Invoice Factoring: A Better Way to Manage Your Accounts Receivable
A vexing problem almost every business faces, large or small, is accounts receivable. How can you get payments from your customers in a quick and timely manner? Is there a way to get them to pay faster? And if not, is there a way to get around the 30- or 60-day lag from when your invoice goes out and their payment comes in?

The answer is yes! Through “invoice factoring,” you can sell your accounts receivable to a third party (known in the business world as a “factor”). The factoring company will pay you immediately and collect the money themselves down the road. This innovative financing concept provides businesses of all sizes with much-needed flexibility in obtaining capital. Factoring costs are directly related to the business cycle, making it an attractive option for various industries, including factoring for service providers

Want to make the most of invoice factoring? Here are a few helpful tips to get you started:
- Understand what invoice factoring is and what it isn’t – Invoice factoring and invoice financing are two types of accounts receivable financing. Invoice financing is similar to invoice factoring in that it’s a way for businesses to get paid quickly on an invoice, rather than having to wait weeks or months before payment is officially due. However, invoice financing doesn’t involve selling invoices. Factoring can certainly help your business improve its short-term cash flow and enable you to get almost immediate money from outstanding invoices. However, factoring cannot, and will not, solve ongoing issues such as customers with bad credit or clients who exceed their credit limit. Yes, a factoring company can aid with some of these, such as performing customer credit checks on your behalf, but ultimately, it’s up to you to determine who is creditworthy, how much credit you should extend, and the terms and conditions of that credit. If you insist on extending credit beyond the amount a factoring company recommends, you are increasing your risk.
- Organization, organization, organization – Before you can even start to take advantage of invoice factoring, you have to know who owes you, how much they owe you, and when that bill is due. After all, if you don’t know the answers, how can you expect a third party to know? If you haven’t done so already, get your customer account files into shape before you engage a factoring company. Make sure all customer files have every piece of correspondence between you and the client, as well as all invoices and payments. Once you’ve done this, you’ll better understand the relationship’s history and, more importantly, you’ll have a clearer picture of the outstanding invoices you can send to a third-party factoring company. Plus, you’ll have an organized accounts receivable system, which is always a good thing.
- Be open, accurate, and include all liabilities – It’s natural as a business owner to be leery of disclosing delicate company information to strangers. However, to get the most bang for your factoring dollar, it’s best to be upfront about all liabilities, including the extent of your company’s indebtedness. By being open and honest, the factoring company can get a more accurate picture of your situation and can better devise a strategy for accounts receivable factoring.
If you’re a business owner navigating accounts receivable challenges, it’s important to recognize that different industries may require unique factoring solutions. For example, staffing factoring is specifically tailored to address the cash flow needs of staffing agencies, allowing them to meet payroll obligations without delay. By leveraging this industry-specific option, staffing companies can maintain steady operations and focus on growth, rather than worrying about gaps in cash flow caused by extended payment cycles. Equally, businesses in the oil and gas sector can leverage oilfield invoice factoring to address industry-specific challenges related to maintaining cash flow.

What are the benefits of invoice factoring?

By uncovering the benefits of invoice factoring, you’ll also learn how it can help grow your access to working capital without going into debt!

Invoice factoring is an alternative form of financing that is available to businesses that may not have an established banking record with a major lender. Banks and traditional lenders often operate on a line-based financing model based on what your business has already done and the assets you currently own. Invoice factoring, on the other hand, is an innovative way for your business to access the funds you have tied up in your accounts receivable.

Here are four major advantages of invoice financing:

1. Shift your cash flow into high gear

Applying for business loans or alternative financing options can take months to get approved. With invoicing factoring, your business can get much quicker access to cash if you have immediate financing needs.

2. Financial flexibility

If your business requires financial flexibility in terms of maintaining cash flow, then invoice factoring would be your best option. This way, invoices don’t have to be paid in full before there is money in the business account.

3. Higher probability of financial approval

When determining the chances of accessing funding – aspects such as your credit score, collateral, and financing history are often considered with traditional financing. However, these are not required for invoice factoring approvals. Your factoring partner is more focused on the payment history of the customer required to pay the invoice. This is important to understand the level of risk that would be taken in invoice factoring.

4. Save time and money – No collateral required

Normally, when a business applies for a loan or line of credit, the bank requires the business to have upfront collateral such as equipment, vehicles, buildings, inventory, or even intellectual property. However, with invoice factoring, a business doesn’t have to worry about showing that traditional collateral. This can save you enormous amounts of time and paperwork.

With these tips in hand, what can invoice factoring do for you? By employing a third-party factoring company, you’ll be able to now:
- Improve business cash flow
- Invest that money back into your business and into your staff
- Move resources away from collections into more useful and profitable positions, such as sales, marketing, or customer service
- With more reliable cash flow on your end, you’ll be current with your suppliers and may even be able to negotiate better terms.
Now that you have a few ideas on how to make the most from invoice factoring, how do you choose a factoring company? Here are a few questions to ask when considering employing an accounts receivable factoring company:
- How long have you been in business?
- What are your fees?
- Must I submit all invoices, or do I have a choice in which ones I send to you?
- Are you industry-specific? Do you have experience with companies like mine?
- May I see references?
Choosing an invoice factoring company is, like all business decisions, one that should be made only after careful consideration. It’s important that you find someone who understands your business and your unique situation. No two businesses are alike. Find a factoring company that not only understands you but one that can offer you a range of solutions to your cash flow problems. The future of your business could be riding on your choice, so be sure, as with any transaction, you arm yourself with the best information you can find in order to make an informed decision.

If you’re ready to grow your business by factoring your accounts receivables, Charter Capital can help. Establishing yourself and finding out your accounts receivable factoring rate is free, so you can get started on improving your cash flow right away. Request a complimentary invoice factoring rate quote now.
September 9, 2019