Frequently Asked Questions

Factoring is a financial service where your business sells its invoices to a factoring company at a discount. This provides you with immediate cash, improving cash flow without incurring debt.

Basic Company Information: Name, Address, Industry, and Amount of Sales looking to Factor (can be an estimate). We will reach out to gather more detailed information once we receive the initial application.

There are no credit requirements to have your invoices factored. We check your customer's credit to determine whether we can factor a(n) invoice(s) or not.

No, just send us the same invoices you send to your customers.

Unlike a loan, factoring does not create debt or require collateral in the traditional sense. It's the sale of your accounts receivable for immediate cash, making it a quicker and often more accessible financing option.

Factoring provides rapid access to cash, doesn't add debt to your balance sheet, and the approval process is often faster and less stringent. It's an excellent option for businesses looking to quickly boost cash flow and for those that might not qualify for traditional bank loans due to size, credit history, or other reasons.

Fees vary but typically range from 1% to 7% of the invoice value, depending on factors like the sales volume of invoices, their size, and the creditworthiness of your customers. You will receive a factor fee proposal upon applying to American Factor.

Once set up, funding can occur as soon as same day but mostly within 24-48 hours of submitting invoices. The initial setup might take a bit longer, as the factoring company assesses your customers' creditworthiness but afterwards they will be set up for a speedy transaction.

One of the big benefits of factoring is that you don’t need to worry about collecting from your customers, we take care of it for you. We work hard developing relationships and following up on all your A/R so that you don’t have to worry about non or late payments.

You may submit invoices for any customer that has been approved by AFI. The majority of approved invoices are factored with Net 30, 60, or 90 day terms. Other terms need to be discussed on a per case basis.

American Factor has a dedicated collection agency that deals with all delinquent accounts. In the event that the agency cannot collect, our legal department takes over and proceeds to recover the debt through legal means.

We provide your approved customers with an assignment letter, that explains the factoring agreement and provides different methods of payment and instructions on how to submit them. Also, all invoices should have a “payable to” section, where you would provide them with our payment address.

We provide all reports on request, as often as needed. These reports can be customized to suit your company’s needs. Every week our clients receive a couple reports: Collection Reports: This report shows all the money that was collected and is being paid back to the client. This is the final step in the factoring process, where the fee is calculated and the balance paid back to the client. This report will show all invoices being paid back with any credits or shortages that were accepted by the client. Accounts Receivable Aging Report: This Report will give you a snapshot of all your currently open invoices with us. This will show any full or partial balances that remain open while identifying the age of any given invoice. This provides good feedback on which customers are very past due, as well as, feedback on how many customers are late and exactly how late they are. Research Items Report: This report includes any problem issues that require the client’s authorization and/or review before it can be resolved. This is usually for credit and other payment shortages that require the client’s authorization to credit or continue collection on the given issue.

Factoring is a financial service where your business sells its outstanding invoices to a factoring company at a discount. This provides you with immediate cash, improving cash flow without incurring debt.

PO Financing provides upfront cash to pay suppliers for confirmed orders before delivery, improving your capacity to take on larger orders. Factoring can then be used to pay off the PO financing loan once the invoice is generated, offering a complete cycle of financial support.

The biggest benefit of factoring your receivables will be improved cash flow. You get money the same day that you ship your order and don’t have to wait until the terms expire for payment. Other benefits include A/R accounting, collecting invoice payments from customers, and customer credit rating checks to name a few. We pride ourselves in forming close relationships with our clients and their customer base. This allows us to learn the ebb and flow of your business so that we can formulate a customized approach to collections and financial reporting. By letting us take care of collections and customer support, you will free up company bandwidth and be able to focus on creating and managing your company into a blossoming enterprise.

Yes, with A/R factoring, we advance based on your customer's creditworthiness not your own. We provide a credit limit for each customer and will guarantee all receivables up to that limit.

No, it does not. The only credit score that could be affected, would be the customer’s, in the event of unpaid invoices that are submitted to our collection agency.

We take care of contacting your customers about the factoring agreement and set them up to pay us directly so that you don’t have to deal with a thing.