Factoring is a Short and Long Term Solution

Remarkably, factoring can provide both a short term and longer term solution to small businesses during economically challenging times like these. It's fast and efficient and unlike a loan, it does not appear on the balance sheet. Invoice factoring is simply a "use it as you need it" service today. Invoice factoring is basically a "use it as you need it" funding option, therefore every invoice purchase is a separate transaction and does not form part of a portfolio lending approach. The transaction is modeled as a buy-sell transaction, and the process includes: Due Diligence - Once approached by a prospective client, the factor undertakes a thorough due diligence program that typically takes about 24 to 48 hours. Review Invoices - Once the due diligence is completed, the client is at liberty to offer invoices to the factor for purchase. Credit Verification - Upon receipt of the invoices, the factor will check the credit of the debtor named on each invoice and make sure the sale represented by each invoice has been satisfactorily complete. Debtors' Notification - Once credit has been verified, each debtor is notified of the purchase by the factor and the client is paid for the invoices. Debtor Payments - At the end of the credit period the debtor will make payment directly to the factor thus completing the transaction.