Factoring FAQs: What Businesses Need to Know

Factoring has been around for a long time – going back to ancient Mesopotamia. Commerce and financing have both gotten much more complex over the years, making it challenging for businesses looking for a flexible and sound solution for boosting cash flow. Below is a primer on factoring services for businesses across all industries.

1. How is factoring different from a traditional loan?

This is one of the most common questions asked about factoring services. The simple answer is that factoring isn’t a loan. Factoring is a simple exchange of unpaid invoices for immediate capital. No debt is placed on the books, which is why factoring is used by businesses of every size and type.

2. Will factoring impact my business credit ratings?

Credit didn’t exist in ancient Mesopotamia, but it plays a role in almost everything we do today. Factoring will not impact your business credit ratings. Because factoring is not a loan, business credit ratings do not go down. If anything, factoring allows businesses to preserve their credit ratings by reducing the need for debt-based financing.

3. How long does factoring take?

The specifics of how long factoring takes differs from service to service. Some factors release payments after a few days, while others can take a week or longer. Single Point Capital turns invoices to cash and makes funds available within a single business day, giving you fast access to the money you need to thrive and grow.

4. What happens to collections on overdue customer invoices?

Collections can cause big headaches for businesses and place a further strain on cash flow. When an invoice ages out, it can take up to 45 additional days for businesses to get payment due to the time and resources involved in performing a collection. Since factoring from Single Point Capital is so fast, unpaid invoices never get a chance to age out to collections. Many businesses use factoring as a means of automating the accounting process by turning invoices to cash instead of devoting resources to chasing after the money they are owed.

5. Do I have to factor all of my receivables?

While some factors require businesses to sign over all of their receivables, Single Point Capital believes businesses should be in the driver’s seat. Our clients can choose which invoices get factored, and they can factor as many or as few invoices as they want. We know that flexibility is the key to success.

6. How can I keep track of invoices and payments?

Single Point Capital offers a suite of tools to our clients so they can track payments, pending and outstanding invoices, and much more. When you sign up with us, you gain a virtual accounting department for your receivables.

7. What if I need help with my account?

No one likes automated menus and robotic voices, which is why we are committed to providing live human account specialists to answer your questions and offer any guidance you need.

If you have more questions about factoring services, contact the experts at Single Point Capital today.