Strengthen Your Finances with Accounts Receivable Financing
Our Accounts Receivable Factoring solutions turn your invoices into cash, so you can get the financing your business needs without taking on debt.
Get peace of mind with predictable cash flow.
More than 60% of small businesses struggle with cash flow. Every business needs a steady stream of cash, both to meet everyday needs and to fuel future ambitions.
The obstacles are many. Slow paying customers. Extended payment terms. Inflating operating costs. Unexpected expenses. Seasonal fluctuations. Economic downturns. Rapid growth. And it’s not always quick or easy to get the funding you need with a traditional bank loan or line of credit.
Accounts receivable financing is a quick and easy solution. Accounts receivable financing helps small businesses by advancing cash based on unpaid invoices. Better yet, it’s easy to qualify as approval is mostly based on your customers’ credit.
Providing accounts receivable financing solutions since 2007, Transwest Capital is the perfect partner for companies looking for predictable cash flow.
What is Accounts Receivable Financing?
Accounts receivable financing is an umbrella term for financing arrangements where a company utilizes invoices to secure immediate working capital. Arrangements may be structured as a loan or as an asset sale (selling invoices). This type of financing allows you to free up cash that would otherwise be sitting in outstanding invoices, providing predicable cash flow to cover expenses, seize opportunities, and invest in future growth.
What is the Difference Between Factoring and Accounts Receivable Financing?
You can think of accounts receivable factoring as a type of accounts receivable financing. Accounts receivable financing can be structured as a loan or as an asset sale. AR factoring refers to those arrangements structured as a sale of your invoices.
Accounts Receivable Loans
With an accounts receivable loan or line of credit, a finance company advances your company a percentage of your outstanding accounts receivable. You remain responsible for invoicing and collecting on your accounts receivable, and then you repay the finance company.
Accounts Receivable Sales (Factoring)
With factoring, also known as invoice factoring, the finance company purchases your invoices. You receive a significant cash advance (up to 90%, occasionally more) in exchange for a small discount on the invoice amount (factoring fee). The factoring company (“factor”) manages your accounts receivable, invoicing your clients and following up on payments. You receive the remaining balance (reserve amount) when your customer pays the invoice.
Transwest Capital specializes in accounts receivable factoring for small businesses.
We’ve provided factoring solutions for small businesses since 2007. Our services help you get the cash you need without taking on debt and provides back-office support to help you streamline your operations.
What are the Benefits of Accounts Receivable Factoring?
Factoring provides several benefits:
Fast and easy approval: You can get approved for factoring the same day. Requirements are more relaxed than traditional loans, and approval is mostly based on your customers’ credit.
Fast access to cash: Upon approval and account setup, you can receive funding as soon as the same day.
Debt-free funding: Due to the nature of selling invoices, you receive funding without taking on additional debt.
Flexible, scalable funding: Because there is no debt involved with factoring, your funding grows as your business grows. More accounts receivable = more funding!
Increased efficiency: Back-office support offloads administrative tasks. Get valuable time back to focus on your main business operations and grow your business.
Protect your earnings: Credit analysis helps you reduce the risk of slow payment, non-payment, and fraud.
Our Accounts Receivable Factoring Services
Same-Day Accounts Receivable Funding
We provide same-day funding of your open invoices. Once your invoices are submitted and verified, you can receive funding on the same day, providing you with quick access to the working capital you need to grow your business.
Submitting your invoices is simple! Our convenient online funding portal lets you upload invoices in just a few clicks.
Credit Analysis
We provide complimentary credit analysis, acting as your outsourced credit department. This analysis helps reduce your risk and safeguards your bottom line by offering valuable insights into your customers' creditworthiness.
Accounts Receivable Outsourcing
We offer comprehensive accounts receivable outsourcing services, handling invoicing and collecting on behalf of clients. By entrusting us with these tasks, you can offload mundane administrative tasks and reclaim valuable time to focus on your main operations.
This streamlined approach not only enhances efficiency but also allows you to redirect your efforts towards driving growth and achieving your business objectives.
How Accounts Receivable Factoring Works
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Perform Work for Clients
Just like you normally would, deliver goods or services to your clients.
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Submit Invoices
Upload invoices and any proof of delivery through our convenient online funding portal.
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Invoicing and Verification
We will invoice your client on your behalf and verify invoice amounts for completed work.
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Advance Payment
Once verified, we will advance you a large % (typically 85-90%) of the invoice amount the same day.
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Invoice Payment & Remaining Balance
We will follow up with clients for payment. When the invoice is paid in full, you receive the remaining balance less a small factoring fee.
Factoring Accounts Receivable: FAQs
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Factoring receivables typically costs between 1% and 5% of the invoice amount. Pricing typically varies according to factors such as monthly invoice volume, average size of invoices, customer creditworthiness, and how long it takes customers to pay.
The main fee that a factoring company charges is the factoring fee. This is the percentage discount off the invoice amount they take as a fee.
Beware of additional fees that can add up. Some companies charge additional fees such as processing fees, monthly minimum fees, early termination fees, and more.
Contact us today for quote and cost comparison.
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AR factoring is not considered debt. This is because your company sells one asset (invoice) in exchange for another asset (cash). Factoring is not a loan.
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The approval process for factoring is typically faster than applying for a traditional bank loan. At Transwest Capital, we provide same-day approvals in most cases.
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Factoring itself typically doesn't directly affect your credit score. Some companies receive the indirect benefit of an improved credit score by having the cash flow needed to meet expenses on time and establish positive payment history.
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Here’s a hypothetical example of accounts receivable factoring:
Manny's Manufacturing specializes in handcrafted wooden furniture. Business is booming, with a recent surge in orders. However, Manny is facing a familiar challenge – slow-paying customers. Their typical payment terms are net 60, meaning customers don't pay for invoices until 60 days after the sale. This creates a cash flow gap, as Manny needs to cover production costs (materials, labor) upfront but has to wait for customer payments.
This cash crunch is putting a strain on Manny's ability to operate smoothly. He needs to pay bills on time but also wants to seize an exciting growth opportunity. A local boutique has expressed interest in carrying Manny's furniture line, but he needs to invest in additional materials and expand his production capacity to meet the increased demand.
Here's where Transwest Capital's accounts receivable factoring services come in. Manny approaches Transwest and explains his situation. They review Manny's financials and invoices and find him a good fit for their factoring program.
Manny decides to factor a portion of his outstanding invoices, say $20,000 worth, with Transwest. Transwest advances him a percentage (let's say 80%) of the invoice value upfront, which would be $16,000. This immediate cash injection helps Manny cover his current expenses and payroll, ensuring smooth operations.
Now, with some breathing room, Manny can focus on the growth opportunity. Using the remaining funds from Transwest and his own working capital, he can invest in the necessary materials to fulfill the boutique's order and expand his production capacity.
Meanwhile, Transwest takes on the responsibility of collecting payment from Manny's customers for the factored invoices. Once the customers pay their invoices, Transwest deducts their factoring fee (a percentage of the invoice value) and remits the remaining balance to Manny.
This partnership with Transwest allows Manny to overcome his cash flow hurdle and pursue growth. He can meet his current needs, invest in the future, and keep his business thriving.
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Transwest Capital is a preferred provider of accounts receivable factoring services for small businesses. With a focus on supporting small businesses in various industries, Transwest Capital provides quick and efficient funding to help companies manage cash flow effectively. Clients appreciate the seamless application process, competitive rates, and personalized customer service that distinguish Transwest Capital as a reliable partner in their business growth.