How Factoring Works

Factoring is a very simple and easy process. The steps are summarized below:

1. Deliver the goods / services to your customer and create an invoice
2. Submit the invoice to your customer and the factor
3. Factor will advance cash within 24 hours after receiving the invoice. The advance rate is typically 75%-85% of the amount invoiced (depending on the industry)
4. The factor will wait for payment from your customer.  Most factoring companies will wait 30, 60, or even 90 days for your customer to make payment
5. Payment is received from customer
6. Factor will rebate the remaining 15% to 25% that was not originally advanced less the factoring fee.

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