Transform Your Receivables into Immediate Capital

At Sterling Street Financial, we specialize in converting your accounts receivable into fast, accessible funds, ensuring your business never misses a beat.

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What exactly is Accounts Receivable Factoring?

Jack P.

Funding Advisor

Accounts Receivable Factoring, often termed “Invoice Factoring,” is a process where businesses sell their outstanding invoices to a factoring entity at a discounted rate. This entity then takes on the responsibility of collecting the payment from the respective customers.

Get Paid in Advance on Invoices

invoices are treated as collateral

Enhanced Cash Flow

Focused more on business credit

Understanding Invoice/Accounts Receivable Factoring

The primary focus of factoring entities is the creditworthiness of your clients rather than your business. If your client has a good credit history and is deemed reliable, the factoring company will typically buy up to 85%-90% of the invoice value. Once they collect the payment from your client, they will then pay you the remaining balance, deducting their service fees.

  • Immediate cash flow boost.
  • No need to chase clients for payments.
  • Credit checks are based on your clients, not your business.
  • Enhances business profitability by ensuring timely cash inflow.

While Accounts Receivable Factoring provides immediate liquidity, it might come at a higher cost compared to traditional financing options. Also, if the factoring entity deems your client unreliable, you might not get approved for the service.

Factoring involves selling your receivables for immediate cash, whereas a loan adds to your debt. Factoring doesn’t appear as a liability on your balance sheet.

In Recourse factoring, if the client doesn’t pay the invoice, the business has to buy it back. With Non-recourse factoring, the factoring entity assumes most of the non-payment risk, but it generally comes at a higher cost.

The factoring entity usually has a set timeframe for collecting payments. If the client exceeds this, certain penalties or fees might apply, depending on the agreement.

Typically, the process is discreet, and clients aren’t informed about the sale of their invoice. However, this might vary based on the factoring company’s policies.

No, while both involve receivables, Invoice Financing uses the receivables as collateral for a loan, whereas in factoring, the invoices are sold.

Steps to Secure Business Funding with Sterling Street Financial

1. Submit Your Online Application

Use our user-friendly platform to quickly request funding. Assistance is just a call, chat, or email away.

2. Talk to Our Experts

Our seasoned experts are ready to guide you through every step, ensuring you are armed with all the necessary information.

3. Get Funded!

After approval, funds are swiftly deposited into your account to boost your business growth.

Ready to grow your business to new heights?