The Process of Factoring Invoices with Us
Your business sells products or services to another business or entity; for each order fulfilled, an accounts receivable invoice is generated.
Rather than managing the invoice yourself, and waiting weeks or even months for your customer to make payment, you decide to sell the invoice to an invoice factor – a company that factors (or buys) the invoice at a discount.
If this is your first time factoring invoices with us, you would apply and request a proposal. Once approved as a factoring client, the customers whose invoices you want to factor are notified and agree to make payment directly to DB Squared.
You receive immediate access* to up to 95% of the full amount of each invoice you sell us – money that could otherwise be tied up for weeks or even months as a receivable. The remainder is placed in reserve, pending payment of the invoice by your customer.
Once payment is received by DB Squared and the amount of the invoice is satisfied, the reserve amount less invoice discount (which usually ranges from 1-6%, per the proposal we agree upon) is forwarded to you as well.
*Same day and next day funding available for our regular factoring clients
Who Should Consider Factoring Invoices?
The need for consistent cash flow is the most common reason companies consider factoring invoices.
For instance, you might need immediate access to working capital tied up in your receivables in order to keep your business growing, take on new business, expand your product or service capabilities, cover operating expenses, or to maintain cash flow consistent with the financial needs of your business.
Businesses considering factoring invoices in order to reinvest in their business more quickly often cite one or more of these reasons:
Customers (which could be other businesses, government agencies or other types of entities) with terms extending out beyond 30 days or more
Customers that routinely take longer than 30 days to pay
Need for immediate access to working capital to take advantage of new business opportunities
Need for immediate access to working capital in order to take on a big account or order
Need for more consistent cash flow to meet operating expenses
Negotiating power with their own vendors and suppliers
Capital expenditures such as equipment purchases, repairs, renovation or expansion