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Invoice Factoring Basics

Frequently Asked Questions | Invoice Factoring Basics

 

Invoice Factoring Basics

What is invoice factoring?
Invoice factoring (or "receivables factoring") is the selling of invoices or accounts receivable at a discount. This process allows businesses that may not qualify for traditional bank loans or an increase in their line of credit to access working capital immediately without adding debt or giving up equity.

How does invoice factoring work?
All you do is submit your customer invoices to us for consideration and approval. We check the creditworthiness of the customer and confirm the invoice. Then, when we purchase the invoice, we advance you a portion of its face value. The rest is held in a reserve account, pending payment.

We notify your customers that the invoices are payable to QC. Once the invoice is paid, eligible reserves are released to you, less the factoring fee.

How is the fee for invoice factoring determined?
The amount varies and may be determined by the:

QC Capital Solutions will help you ensure that invoice factoring is a cost-effective cash flow solution for your business.

Invoice factoring basicsIs invoice factoring expensive?
Compared to traditional bank financing, invoice factoring can be more expensive. For businesses that need additional working capital to support growth but do not qualify for traditional bank loans or for an increase in their line of credit, invoice factoring can be an excellent choice.

Do I have to factor all of my customers?
No. With QC Capital Solutions it is entirely up to you which customers to factor and which not to.

Will I still be able to get traditional bank financing?
Invoice factoring can actually improve your ability to qualify for traditional financing. Invoice factoring will not show as a liability on your balance sheet and can improve your debt-to-equity ratio. Traditional lenders look at both of these when deciding whether to make a loan or increase a line of credit.

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