![]() There are several alternatives to factoring. The arrangement is non-recourse, meaning that there is no chargeback to the client if the invoice is not collected. If the invoice is collected after two months, the client would pay $438 and get $562 back from the reserve. In this scenario, the client would pay $219 per month to get the invoice factored. Discount rate: 2.19%, or $219 every 30 days.We offer an online account management system and back office assistance.”īelow is an example of a factoring arrangement: Some may not hold back the reserve and not charge any other fees, aside from the discount rate.īusiness Factors can help staffing agencies to monetize invoices in 2-3 days with competitive rates that work with any budget. Staffing is among the industries with a high advance rate.įee structure varies by factor. Once the invoice is paid, the reserve – minus the discount rate and other fees – is returned to the client. As such, the advance rate – which is what a business owner actually gets when the invoice is factored – ranges between 70% and 96%. ![]() A part of the invoice can also be held back as a reserve. On top of the discount rate, factors can charge fees associated with due diligence, termination of the contract, monthly minimums, etc. The discount rate depends on the dollar amount and number of factored invoices, credit quality of your clients and your industry, among other factors. The fee that a factor charges for their services is called a discount rate.
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