How fast is invoice factoring? Can companies get paid same day? What are the factors impacting the speed of invoice factoring?
Invoice Factoring can be one of the quickest financing solutions available, providing access to funds in as little as 24 hours after you submit your invoices. Some factoring companies even offer same-day funding, depending on the agreement and documentation provided.
The speed of factoring hinges on several factors:
1. Initial Setup:
The onboarding process for a new client can take anywhere from few business days, to a few weeks, depending on the size and complexity of the deal, as well as the factor’s internal procedures and controls. During this time the factoring company verifies your business information and history, your account debtors, and necessary paperwork.
2. Invoice Submission:
Once approved, submitting invoices is quick and straightforward. Many companies provide online portals or apps for seamless uploading.
3. Verification Process:
After you submit an invoice, the factor verifies its validity with your account debtors and ensures that the work is completed or the goods are delivered. This step typically takes a few hours to a day. It largely depends on the responsiveness of your account debtors. Some factors will only verify a select number of invoices, increasing the speed of funding, while others will verify every invoice.
4. Funds Disbursement:
Upon successful verification, you receive an advance of 80-95% of the invoice value within the specified timeframe. Some factors fund within 24-48 hours, others may fund same day.
Conclusion
For small to medium-sized businesses that rely on consistent cash flow, invoice factoring bridges the gap between service delivery and payment from customers. By choosing a reliable factoring partner, businesses can maintain liquidity, cover operational expenses, and seize new opportunities without financial stress.
In summary, factoring is designed to be a fast and flexible financing solution, giving businesses access to funds within days (or hours) rather than weeks. This speed makes it an ideal choice for companies looking to maintain steady cash flow without waiting for slow-paying customers.
