![]() Most agreements will include a volume commitment. Be sure to ask your potential factoring company questions and read through the contract thoroughly prior to signing. At Scale Funding, we offer month-to-month contracts and 12 month contracts depending on the situation. The term of the contract varies depending on your program. The agreement is the contract between the client and the factoring company. ![]() All About Factoring AgreementsĪt the foundation of a relationship with an invoice factoring company is the factoring agreement. This is one of the many benefits of factoring for companies that might not qualify for traditional lending or don’t want to increase their debt. The eligibility is based on the credit and payment history of a business’s customers, not that of the business itself. Factoring is not a loan, so there is no debt created by it. Invoice factoring supplies companies the immediate cash they need to not only operate their business but also to grow. The remaining balance, less a fee, is paid to you.Customer pays the invoice to the factoring company.Receive a cash advance from the factoring company.Send the invoice to the factoring company.Once the customer pays the invoice, the remaining balance, less a factoring fee, is remitted to the business. The invoice is then sent on to the customer, who processes and pays it in their regular terms. The factoring company advances the business, a percentage of the value of the invoice, generally 90%, that same day. When the customer is billed, the unpaid invoice is sent to the factoring company first. A business provides work, services, or products to their customers. Instead of waiting for customer payment, factoring provides you with immediate working capital so you can catch up on bills, meet payroll, maintain daily operating expenses, and grow your business with ease. ![]() Invoice factoring is a financing solution where a business sells its open receivables to a factoring company in exchange for immediate cash. ![]()
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