HOW INVOICE FACTORING WORKSThere exist several instances when businesses may suffer financial losses. These can include non-payment by users, slump in the stock market, or even due to bad debts. To recover such lost funds, businesses can make use of invoice factoring. Given below is information on how invoice factoring works

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INVOICE SUBMISSIONThe user first submits the unpaid invoice to a third party company who will consider the eligibility of the submission. Based on further research on the client/clients in question and any other credit risks, the company makes a business transaction with the user.

RATE OF ADVANCEDepending on the user’s industry, transacted money or any other risk inducing parameters, the factoring company pays an initial advance which varies from 70-98%. A notice is sent to the clients who have caused the payment delay and the process for payment recovery is set-up.

PAYMENT RECOVERYThe factoring company who has assigned the notice also decides on a particular time period for payment which could range from 30 to 90 days or even more. After the company has received

payment, it pays the client the invoice amount after deducting their fees from it.

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