Accounts Receivable Financing and Factoring Facilities Help Indian Businesses Grow!


Invoice factoring can be very useful for businesses who are looking to keep their cash flow moving and their resources stable. Invoice factoring companies helps other companies to improve their cash flow on the basis of their outstanding invoices. B2B Companies can take advantage of immediate access of money, So there is no need to wait for your payments from clients.

The process where a business sells its accounts receivable (invoice) to a third party (factor) is called Invoice factoring. By this you get your money right away, but at a discount. Invoice factoring companies are helpful when business have clients that make their payments very late, slow paying clients. Always Remember, the money you get is a debt-free capital which can be used for anything from initiating payments to staff or making an investment.

On the basis of your outstanding invoices when the invoice factoring companies gives you money, It charges a fee known as factoring fee or rate which is in percentages. For example, If the factor rate is 4% on an invoice of Rs.10,000, factoring company would take Rs. 400 as the fees. Generally, the rates vary between 1% to 5% depending on various factors. Good Invoice factoring companies usually research about and looks into the credit history of the seller’s customers before factoring. 

Receivables financing is a fantastic funding option for nearly every industry including but not limited to import, export, transport and manufacturing. It can prove to be a good way for companies that require money immediately, but could not draw a conventional, bank loan. Accounts receivable financing is different from invoice factoring as invoice factoring refers to selling some or all outstanding invoice to a company known as factor, where as accounts receivable financing is working with the A/R entirely.

Merits Of Receivable Financing

● Immediate Working Capital 
This source of funding can be excellent for working capital which is required to grow and evolve to reach its full potential.

● Immediately Access Cash
Receivable Financing can help you to access cash in short span which can be really valuable when a company is in crisis mode.

● No Need To Give Up Equity
Equity is a common form of raising capital by selling equity stakes. It dilutes previous ownerships and cause some important owners to walk away.

For most new companies cash flow could be the main pressure that restricts the business growth. It is a very common reason for failing of a business at a very early stage. But this can be overcome with the help of receivable financing or by invoice factoring.

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