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Invoice Factoring Demystified

HOW DOES FACTORING WORK Answers and more from: What if someone takes longer What if someone pays in 30 days? than days? MP STAR FINANCIAL What is Invoice Factoring? Įnvoice factoring is a form of asset-based lending where companies are able to improve cash flow by selling their invoices oreas or accounts receivable. In simple terms, companies factor to turn their' invoices into'cash to operate and grow. your cash flow! Increase Source: MP Star Financial 1 The following is a general example of how factoring works. If your customers normally pay 30 days after receiving an invoice O 5 5 65 5 5 5 5 5 5 5 5 5 5 HERE'S WHATHAPPENS WITH INVOICEFACTORING Submit invoice to factor DAY Example: $1,000 invoice Factor pays you 80% of invoice amount now minus a fee (3.5%) DAY 80% of $1,000 is $800 minus 3.5% equals $765. You get $765 now and $200 is held in escrow. Your customer pays invoice total to factor DAY 30 $200 held in escrow is issued back to you If your customers normally take longer than 30 days to pay HERE'S WHATHAPPENS WITH INVOICEFACTORING 5 節 而 Submit invoice to factor DAY Example: $1,000 invoice Factor pays you 80% of invoice amount now minus fee (3.5%) DAY 80% of $1,000 is $800 minus 3.5% equals $765. You get $765 now and $200 is held in escrow. Your customer pays in 31 to 45 days DAYS 31-45 $17.50 is deducted from the $20o0 held in escrow. The escrow remainder of $182.50 is issued back to you. Your customer pays in 46 to 60* days DAYS 46-60* $35 is deducted from the $200 held in escrow. The escrow remainder of $165 is issued back to you. *some invoice payments extend beyond 60 days. For more information, please contact us today. MP MP Star Financial ACCOUNTS RECEVABLE FINANCING SINCE 1995 www.MPStarFinancialcom l 1-800-833-3765 #150

Invoice Factoring Demystified

shared by baeumlisberger on Mar 05
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Explaining how invoice factoring can help businesses meet their cash flow demands can be exasperating. Luckily, the fine folks at MP Star Financial have commissioned this infographic to help you out. ...

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