Accounts Receivable Factoring (Accounts Receivable Finance) is a form of financing where a business sells its accounts receivable to a financier known as a Factor. Once a business sells its accounts receivable, or invoices, the business immediately receives cash for a percentage (70-95%) of the invoice. The remainder, less the Factor's fee, is paid to the seller when the full invoice payment is received and cleared by the Factor.

The following example shows how simple Accounts Receivable Factoring really is:

Consider a software development company who has just delivered $100,000 of software to a major computer manufacturer. Instead of waiting the typical payment period, which could be 90 days or more, the software company could factor the invoice with FBFC and receive between $70,000 and $95,000 within 24 hours. This cash could then be used to fund a marketing campaign for a new software release, or simply pay off some outstanding debt. As soon as the computer manufacturer remits payment, and the payment is cleared by FBFC, the software company will receive the remaining value of the invoice minus the Factoring fee.

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Credit Card Factoring (Merchant Cash Advance) is a form of financing where a business sells its future credit card receivables to a financier known as a Factor. This Factoring method may apply to a business which does not invoice its customers but accepts credit and debit cards.  The Factor will make a decision on funding amount and risk exposure it will assume by reviewing the past sales performance of the business.  Once the merchant receives funding, payment flows as a small percentage through the merchant’s processor until the Factor is once again made whole.  This method is ideal for hotels, restaurants, retail businesses, and seasonal business, for example. 

Consider a retail merchant who generates an average of $50,000 per month in Visa/MasterCard sales and has the need to expand, meet taxes or payroll, purchase inventory, etc but chooses not to deal with the bank’s red tape and delayed funding, or simply doesn’t have the credentials the bank is seeking.  That merchant can come to us and receive funding up to 135% of their monthly average in quick fashion, meet their goals, and pay the funding back only as the business can afford it, when the business is making sales.  Withholding percentage through the processor is accommodating – our cash flow engines determine what the business can reasonably afford – keeping your business healthy is in our best interest, completing the win-win transaction.

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