a.k.a. Factoring, Invoice Discounting, Debt Factoring, Accounts Receivable Factoring
Accounts receivable factoring is a solution that allows you to finance your slow-paying invoices. It is used by companies that cannot afford to wait 30 to 60 days to get paid by clients. Invoices are usually financed in two installments. The first installment covers up to 85% of the invoice. It is paid as soon as the product is delivered to the client. The remaining 15%, less a small fee, is paid once your client pays the invoice in full. Factoring is easier to get than most financing products. The main requirement is to work with creditworthy commercial clients (quality invoices). Aside from that, your invoices cannot be encumbered by any liens.
How it works
Accounts receivable financing is a form of asset-based lending (ABL) utilizing a company’s accounts receivable as collateral. Factoring invoices is also used to mitigate credit risk, as you would know from the steps below....
Your company provides goods or services to larger creditworthy customers and submit correct invoices
Your company needs to be paid sooner than agreed terms(ie, 30-90 days) with your customers
Your company sells its unpaid invoices to an invoice factoring company (like GhanaStartups.org) per a factoring agreement
The factoring company verifies the invoices are valid with the company receiving up to 90% of the invoice amount. Once the account is set-up payment can be as fast as 24-72 hours
The larger credit worthy customers make payment directly to the factoring company (GhanaStartups.org) according to the terms of the invoice. The factoring company then pays the balance of the invoice back to your company minus a fee.
You need to be a registered business and an existing customer of this platform to qualify. No upfront fees required.
How to Signup
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