A question I’m often asked is; what is factoring? Factoring is simply the process of selling your slow paying invoices for immediate cash. It’s an attractive form of financing for businesses that sell on terms and have to wait weeks or months for payment. This lag time between delivery and payment creates a strain on cash flow and business owners find themselves struggling to cover day-to-day expenses. A factoring company will advance 70%-80% of your accounts receivable up front and rebate the balance upon collection from your customer (minus a small factoring fee). You can use the cash from these invoice advances however you’d like, including paying bills, covering payroll, hiring new staff, and purchasing supplies. The factoring company earns their fee when payment is received from your customer. The factoring fee is calculated as a percentage of the invoice amount. Not to be mistaken for Accounts Receivable Financing, which uses your receivables as collateral for a loan, factoring is the actual purchase of your receivables. Therefore, there is no interest to pay and no debt to record on your balance sheet.

Invoice Factoring with Keystone Capital Funding provides the following benefits:

Fast Cash

Factoring advances are wired directly into your account within 24 hours.

Easy Approval

Your company can have bad credit or no credit at all and still get approved by Keystone Capital Funding. We’re more interested in your customers’ ability to pay than your financial history. In fact, you don’t have to provide tax returns, business plans, or financial statements. If you have credit-worthy customers, you can get financing through Keystone.

Debt Free Growth

With factoring, you are not borrowing money. You are selling an asset – your accounts receivable. Unlike a loan from a bank, there is no interest to pay back and no debt is placed on your balance sheet.

Low Cost Factoring

Accounts receivable factoring fees are calculated by how long it takes your customer to pay a factored invoice. Keystone charges a fixed percentage every 10 days an invoice is outstanding. Most factoring companies charge in 30 day increments so if your customer happens to pay early, you won’t get the benefit of a discount. This key difference could add up to thousands of dollars in savings to you per month. Often times our factoring fees are less than what you are already “paying” your customers by extending 2% 10 terms. And when considering how much money you’ll save by outsourcing your AR management activities to Keystone, invoice factoring is a tremendous value.

Accept New Customers

Diversify your client base to increase revenues and eliminate your company’s dependence on one or two big customers.

Earn Supplier Discounts

If your vendor offers 2% 10 net 30 terms on, let’s say, a $10,000 shipment of raw materials, you’ll have the cash on hand to save 2% or $200 on every order by paying early. The money you’ll save on supplies will offset your factoring fees.

Reduce Stress

Why be at the mercy of slow paying customers? Accounts receivable factoring unlocks the cash tied up in your invoices so you can meet payroll and pay bills on time every month.

Reduce Overhead

Keystone will act as your virtual back office by handling your accounts receivable servicing and collections activities. This may allow you to downsize your AR management staff.

Extend Terms

Grow your business by making it easier for customers to buy from you. Because you’ll receive cash from Keystone immediately, you can give larger customers the option of paying their invoices in 30, 60, or 90 days.

Time Management

Keystone will assume many of your day-to-day administrative responsibilities so you and your staff can focus on what makes you money – sales and marketing.

Enhance Your Reputation

Your customers will be impressed with your ability to meet demand and may increase the size and frequency of orders.

Business Allies

Unlike a bank that collects interest on a loan (even when your company isn’t doing well), Keystone only gets paid when your company gets paid. As your business grows and submits more receivables for factoring, Keystone will earn more fees. Because of this aligned relationship, we view ourselves as partners in your business and take a personal interest in your success.

Build Your Credit

The steady cash flow that accounts receivable factoring provides will help you establish a track record of paying your bills on time. Your credit rating will improve and you’ll have the option of obtaining conventional financing in the future.