Strengthen Your Finances with Accounts Receivable Financing

Factoring receivables typically costs between 1% and 5% of the invoice amount. Pricing typically varies according to factors such as monthly invoice volume, average size of invoices, customer creditworthiness, and how long it takes customers to pay.

The main fee that a factoring company charges is the factoring fee. This is the percentage discount off the invoice amount they take as a fee.

Beware of additional fees that can add up. Some companies charge additional fees such as processing fees, monthly minimum fees, early termination fees, and more.

Contact us today for quote and cost comparison.

AR factoring is not considered debt. This is because your company sells one asset (invoice) in exchange for another asset (cash). Factoring is not a loan.

The approval process for factoring is typically faster than applying for a traditional bank loan. At Transwest Capital, we provide same-day approvals in most cases.

Factoring itself typically doesn't directly affect your credit score. Some companies receive the indirect benefit of an improved credit score by having the cash flow needed to meet expenses on time and establish positive payment history.

Here’s a hypothetical example of accounts receivable factoring:

Manny's Manufacturing specializes in handcrafted wooden furniture. Business is booming, with a recent surge in orders. However, Manny is facing a familiar challenge – slow-paying customers. Their typical payment terms are net 60, meaning customers don't pay for invoices until 60 days after the sale. This creates a cash flow gap, as Manny needs to cover production costs (materials, labor) upfront but has to wait for customer payments.

This cash crunch is putting a strain on Manny's ability to operate smoothly. He needs to pay bills on time but also wants to seize an exciting growth opportunity. A local boutique has expressed interest in carrying Manny's furniture line, but he needs to invest in additional materials and expand his production capacity to meet the increased demand.

Here's where Transwest Capital's accounts receivable factoring services come in. Manny approaches Transwest and explains his situation. They review Manny's financials and invoices and find him a good fit for their factoring program.

Manny decides to factor a portion of his outstanding invoices, say $20,000 worth, with Transwest. Transwest advances him a percentage (let's say 80%) of the invoice value upfront, which would be $16,000. This immediate cash injection helps Manny cover his current expenses and payroll, ensuring smooth operations.

Now, with some breathing room, Manny can focus on the growth opportunity. Using the remaining funds from Transwest and his own working capital, he can invest in the necessary materials to fulfill the boutique's order and expand his production capacity.

Meanwhile, Transwest takes on the responsibility of collecting payment from Manny's customers for the factored invoices. Once the customers pay their invoices, Transwest deducts their factoring fee (a percentage of the invoice value) and remits the remaining balance to Manny.

This partnership with Transwest allows Manny to overcome his cash flow hurdle and pursue growth. He can meet his current needs, invest in the future, and keep his business thriving.