Invoice Factoring Explained
Invoice Factoring is the sale of a properly issued invoice in exchange for immediate cash. A “properly issued invoice” means that goods and/or services have been delivered and accepted by a buyer with payment of the full amount shown in the invoice due according to the invoice terms.
Factoring is one of the oldest forms of financing and has been used by business people around the world for over 4000 years. Factoring has been used for so long because it gives a business the ability immediately convert their accounts receivable into cash and increase cash flow without incurring debt or giving up ownership in the company. Factoring is especially useful when dealing with companies that slow-pay their invoices.
DBR has been factoring accounts receivable for clients in a wide variety of industries since 1988. Because of the competitive rates and superior customer service DBR provides, many Southern California companies have factored their accounts receivable with DBR for over 10 years.
How Does Invoice Factoring Work?
DBR makes certain that all DBR clients have a clear understanding of the following steps required for the factoring of invoices.
Step 1 – A credit limit is established for each customer of a DBR client.
Step 2 – The company to whom a Factored Invoice has been issued confirms (i) validity of the invoice and (ii) that the invoice and payment of the invoice has been assigned to DBR.
Step 3 – The DBR client receives a cash advance of up to 80% of the invoice amount.
Step 4 – When DBR receives payment for the Factored Invoice, the 20% reserve amount less DBR’s fees is rebated back to the DBR client.
A DBR Factoring account can be set up in 2-3 days and funding of a factored invoice will occur on the same day the funding request is received. To learn more about the benefits of invoice factoring, please contact DBR’s COO, Ben Gage by phone at (760) 738-1400 or email at Ben@dbrfactors.com