How Does Accounts Receivable Factoring Work?

The initial step is for your company to complete a simple application and supply some requested documentation.  Once the application and all documents are received, “due diligence” as to the credit worthiness of your customers will take just a few days to complete for application approval.  Once your factoring account is open cash advances against valid outstanding commercial invoices are wired to your company within 24 to 48 hours on a regular basis upon your instruction. Working capital is then in your hands ready to apply as needed.

Your cash advance against each invoice will consist of 80 - 90% of the invoice face amount.  The remaining portion of the invoice is retained by the factor and is called a “reserve”. You will later receive the reserve once your customer has paid the invoice in full.  The factor deducts a small discount fee from the reserve.  The amount of cash advance and discount are directly related to your monthly sales volume and the credit standing of your customers (not your credit standing). The discount is also based on various risk factors such as the length of time your customer takes to pay the invoice in full.  You may certainly discuss the aspects of the factoring process with our associates. 

How long will SLBC take to approve my application?

Once a client completes our quick application and supplies some basic documentation the factor conducts “due diligence” to ascertain the creditworthiness of your customers who owe invoices for services and goods already delivered.  Due diligence may take a few days to complete.  A factoring account is then set up with agreed upon terms and an on going relationship exists with the factor.  Further applications are unnecessary and there is no debt to repay.  Cash flow becomes consistent and predictable allowing more opportunity, growth, and efficient  management.