Invoice Factoring

Invoice Factoring or Accounts Receivable Factoring is an agreement with a third party to purchase the total amount of outstanding receivables at a discounted amount than the face value of the invoice. This type of factoring provides a quick cash flow accessible to the business, up to 95% of the invoice’s value. When the balance on the invoice is cleared, the factor returns the payment and deducts some fees. The costs of such factoring depend on various factors and can range between 1-10%.

Is AR Factoring Good For Your Business?

Invoice FactoringAR Factoring can be good for your business if your business has a cash flow problem and wants to open up a source to access quick financing. Most invoices are set up for payment terms of 30 or 60 days, which means that once the invoice is sent out to the customer, the money is not realized in the business’ bank account for about a month. These long payment cycles put many companies in a constant cash crunch, making it hard to keep up with necessary operating expenses. Companies can use invoice factoring to speed up their cash flow and unlock working capital

Our Process of Invoice Factoring

  • At first, the business will provide goods or services to its clients/customers.
  • The internal AR department creates the invoices and sends them to the customer.
  • The company accumulates the outstanding invoices and reaches out to Avon River Ventures.
  • The business sells the unpaid invoices to us and receives a percentage of the value (typically between 70-92%)
  • We collect the payment from the original customer.
  • Once the customer has paid, we pay back the remaining balance on the invoice to the business after deducting our factoring fees.

Bifurcation of factoring from the standpoint of risk:

  • Recourse Factoring: This simply means that if the customer fails to pay the value of the invoice, the company must pay it back to the factoring company. This instrument of factoring adds a layer of risk to the company, and hence we offer very low-interest rates and lower factoring fees
  • Non-Recourse Factoring: Alternatively, with non-recourse factoring, the risk of default - if your customer fails to pay off the loan, is assumed by us and not your business. As this is a lower risk to the company, non-recourse factoring comes at a higher interest rate and comparatively more factoring fees.

Bifurcation of factoring from the standpoint of size and volume:

  • Spot Factoring: If you have only one hefty outstanding invoice due to being received and you need to be paid now, we can factor only that particular invoice and not account for the remaining unpaid invoices.
  • Full Ledger Factoring: Full Ledger factoring means that the factoring company requires you to factor all of your invoices together. Some businesses don't have payment delay issues across all customers, so this may not be preferable.

Benefits of invoice factoring

  • Improved Cashflow: Invoice Factoring is the easiest way to sell invoices to Avon River Ventures and make your cashflows more controlled and predictable. This means your business has easy and quick access to cash, helping you plan more effectively to manage your working capital
  • Non-traditional source of financing: Factoring is an alternative to a traditional bank or a term loan. To the companies who have either maxed out on the threshold of bank borrowing or, due to unforeseen reasons, cannot access term loans, invoice factoring is the easiest way to access finance quickly.
  • Never have to chase your customers for payments: You read it right! No hidden terms. You can focus on doing your business and not worry about getting paid. Avon River Ventures pays you for the invoice and does all the groundwork for freeing up resources for Account Receivable activities.

Structured Financing

Get in Touch

Please feel free to contact us. We are open Monday to Friday from 9 AM to 7 PM EST. just call us now

(For Canada)
+1 (647) 609-9086

(For USA)
+1 (424) 338-5756