Invoice Factoring in Canada
Factoring provides quick access to cash, improves cash flow, reduces the burden of collections, and allows you to manage and grow your business without waiting for customer payments.
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What is invoice factoring?
A factoring loan, also known as invoice factoring, is a financial service where your business sells its outstanding invoices to a lender at a discount. This arrangement provides you with immediate cash, enhancing your working capital without incurring debt.
What is the process for invoice factoring?
- Invoice Submission: Send us your outstanding invoices that you wish to factor.
- Verification and Approval: We quickly verify the invoices and approve them for factoring.
- Immediate Cash Advance: Receive up to 90% of the invoice value upfront as a cash advance.
- Customer Payment: We handle the collection of payments from your customers.
- Receive the Balance: Once collected, we send you the remaining balance, minus a small factoring fee.
What are the benefits of invoice factoring?
- Improved Cash Flow: Access immediate funds without waiting for customer payments.
- No Debt Accumulation: Factoring is not a loan; it’s an advance on your own funds.
- Time-Saving: We manage the collections, allowing you to focus on your core business activities.
- Flexibility: Factor only the invoices you choose, with no long-term commitments.
- Credit Protection: Mitigate the risk of customer non-payment.
Can my business benefit?
Our factoring loan services are ideal for businesses that have long invoice payment cycles or are looking to grow without traditional financing. It’s particularly beneficial for small to medium-sized enterprises (SMEs), startups, and companies in industries like manufacturing, wholesale, transportation, and services.
Invoice Factoring FAQ
Is invoice factoring considered a loan?
No, invoice factoring is not a loan. It’s an advance on the funds owed to you by your customers, so it doesn’t create debt on your balance sheet.
What types of businesses use invoice factoring?
Businesses across various sectors use factoring, especially those with long invoice payment terms. Common industries include transportation, manufacturing, wholesale, staffing, and service providers.
How quickly can I access funds through factoring?
Typically, funds can be available within 24 to 48 hours after the invoices are verified and approved by the factoring company.
What percentage of the invoice value will I receive upfront?
Generally, you can receive between 70% to 90% of the invoice value upfront. The exact percentage depends on the agreement with the factoring company.
Will my business's credit affect my eligibility for factoring?
Factoring primarily focuses on the creditworthiness of your customers, not your business. However, some basic credit checks on your company might be conducted.
How are the fees for invoice factoring calculated?
Fees are typically a percentage of the invoice value and depend on factors like the volume of invoices, the creditworthiness of your customers, and the payment terms.
What happens if my customer doesn’t pay the invoice?
This depends on whether you have recourse or non-recourse factoring. With recourse factoring, your business is responsible for unpaid invoices. With non-recourse factoring, the factoring company assumes the risk of non-payment.
How do I start with invoice factoring in Canada?
You can start by contacting us directly through our online contact form or by phone. Our team will guide you through the application process.
