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Invoice Factoring For Small Businesses

Get Up To 90% of Your Invoices Paid Upfront

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Invoice finance or invoice factoring allows you to show your valid invoices to a lender and receive up to 90% of its value upfront - with the option to repay over 30 to 90 days when your invoice clears.

With Pheabs, you can borrow $1,000 to $500,000 as an advance based on your outstanding invoices. Get a decision in minutes and receive funds within 24 hours. Check your eligibility using the form provided!

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What is Invoice Factoring or Finance?

Invoice finance is a great way to access cash fast for your small or large business, using your future invoices as collateral.

For industries such as construction, marketing agencies, fashion labels, manufacturers and caterers, they are used to waiting 60, 90 or 120 days for their invoices to be paid (known as accounts receivable) but they require working capital in order to keep their businesses moving – such as paying for staff, materials and overheads. 

With invoice finance, you can show your lender a valid outstanding invoice (or multiple invoices) which they can verify with the supplier and if approved, they can give you an advance of 70% of its value upfront.

The words of invoice financing, factoring and discounting are often used in the same context and have very small differences. Even though the product may be a little different, the rates are still the same. By speaking to one of our advisors, we can make sure that you get the best version of the product for your needs and requirements.

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Invoice Factoring Example:

Sophie and her fashion startup has just received an order for 30,000 t-shirts from a major client such as Walmart, who have payment terms of 120 days. Sophie needs the working capital to produce and ship all her t-shirts, so she applies for invoice factoring and receives 90% of the invoice value upfront which she uses to hire staff, buy materials and produce the goods. 

The invoice finance company verifies the order is real and legitimate and advances her the money. After 120 days, the lender collects the full payment from Walmart and sends Sophie the remaining amount, minus their fees.

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invoice factoring example

Key Features

Min Loan Amount $3,000
Max Loan Amount $500,000
Duration Until the invoice is paid – 30, 120 days or more
Repayments The lender takes directly from the client
Eligibility Min. 3 months bank statements
Interest Rates 1% to 5% 
APR 50% to 79%
Bad Credit OK
24 Hour Funding Yes

How Much Does Invoice Factoring Cost?

The fees for invoice financing are around 1% to 5% every 30 days that the loan is open. The rates are very low because your outstanding invoices are used as collateral or security, making it very affordable for small businesses. 

Repayment example: Based on a $100,000 invoice with 30-day payment terms, you receive an advance of 90% which is $90,000. The company charges 2% per week of the total sum ($2,000 per week) and you keep it open for 4 weeks, which is a total of $8,000 repayable. 

Overall, you will keep $92,000 of your $100,000 invoice and pay the lender $8,000. 

Speak to Pheabs For:

  • Accounts receivable loans
  • Accounts receivable financing
  • Invoice advances
  • Invoice collateral loans
  • Invoice discounting and funding
  • Invoice financing for small businesses and SMEs
  • Invoice line of credit
  • Single invoice finance
  • Working capital loans

How To Apply For Invoice Finance in 3 Simple Steps

apply form

Step 1

Enter your details online with Pheabs, telling us how much you wish to borrow and how long for.

decision

Step 2

One of our advisors will get in touch with you today and request some additional information including past bank statements and outstanding invoice details

funded

Step 3

Once your invoice has been verified and approved, you can receive funding in 24 hours

What is the Eligibility For Invoice Factoring?

  • You must be a registered business and be trading for a certain period (some lenders require a few months, 1 year or 2 years)
  • Must be trading, not bankrupt or going out of business
  • Provide a valid invoice from your supplier
  • A credit check may be required both on a personal and business level

What Information Do I Need to Provide To Apply?

  • 3 months worth of business bank statements
  • Basic information about your business
  • Some lenders may request financial statements, such as an accounts receivable ageing report
  • The invoice or invoices you would like to receive an advance for

Is Invoice Financing Right For Me and My Small Business?

Invoice finance can offer a very fast and affordable way to borrow money to help grow your business. For so many businesses that rely on outstanding orders and invoices, this type of funding gives you the cash you need – and with affordable rates.

However, it is important that you run the numbers and ensure that it is still profitable for you. Some people prefer to do a one-off single invoice factoring and others continuously use this product over and over again, sometimes handing over their entire book of invoices, known as invoice discounting.

Invoice Financing is Ideal For:

  • Accountants
  • Cleaning companies
  • Construction companies
  • Contractors
  • Doctors
  • Fashion brands
  • Fast moving consumer goods
  • Law firms
  • Marketing agencies
  • Pharmacies
  • Recruitment agencies
  • Small businesses, startups and SMEs

Where Can I Get Invoice Factoring From Pheabs?

At Pheabs, we work with a range of invoice finance companies including private lenders, banks and institutions. We offer our services across the whole of the US including: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Washington DC, West Virginia, Wisconsin, Wyoming

What is Invoice Financing Used For?

  • Growth opportunities
  • Marketing and advertising
  • Equipment financing
  • Buying inventory and stock in bulk
  • Hiring new employees
  • Investing in staff training
  • Keeping your cash flow in check

Why Should I Use Pheabs as an Invoice Financing Broker?

At Pheabs, we are here to help you get the best product for you and your small business, and at the most competitive price. We work with a number of professional and legitimate invoice finance providers and do not charge you any fees – only taking a small fee from the lender if your application is successful.

We will often recommend the best company for your needs, not necessarily the one that is most profitable for us. Plus, you have an advisor on hand who will contact you soon after applying to guide you through the process and help you get funded as quickly as possible.

FAQs

How Does Invoice Factoring Work Explained

Invoice factoring or financing allows you to get money upfront on any outstanding invoices, that might take 30, 60, 90 or 120 days to be paid.

The lender will verify with the supplier that the invoice is legitimate and they have made an order or contract with you. Usually, the bigger and most established the supplier, the more likely that your application can be approved and for larger amounts.

You can receive 70% to 90% of the invoice amount upfront, taking factors such as revenue, cash flow and client’s financial history into consideration.

The invoice finance company is responsible for collecting the repayment from your client – and they will return any final sums to you, whilst taking fees of 1% to 5% out of the final pot.

What Is The Difference Between Invoice Financing and Invoice Factoring?

Invoice financing and factoring work in very similar ways and often used in the same framing. The main difference is that financing is very similar to a loan or line of credit, backed up by your outstanding invoices and you collect repayments from your customers.

With invoice factoring, you are handing over a lot more to the lender. They can buy a chunk of outstanding invoices at a discount and give you a portion upfront, and they can take collections from your customers.

 

What is The Difference Between Single Invoice Finance and Invoice Factoring?

Some companies prefer to use single invoice finance on an ad-hoc basis, as and when they need help with cash flow.

Some small businesses prefer to handover an entire ledger of invoices and continuously have a company managing their invoices, payments and collections. 

 

Can I Get Invoice Finance With Bad Credit? 

Yes absolutely, whilst your credit score may be taken into consideration, the strength and validity of your invoice is key when the lender is making their decision. And if you have good revenue, a strong contract and viable invoice from a legitimate company, you are in a good position to get the finance you require.

Are There Credit Checks Involved With Invoice Factoring?

Yes, it is common for a lender to run a credit check when you apply, just to ensure that you do not have a huge history of defaults, missed payment or bankruptcy. However, having bad credit will not stop your loan from potentially being funded, since the strength of your invoice will play a huge part in whether you are approved. A credit check may however give an indication of how well you are likely to complete the job and for the invoice to get cleared.

Does The Lender Take Collections From My Client or Do I?

Depending on the product, you can opt to take collections yourself from the client (invoice financing) or whether you would like the lender to take collections from the supplier on your behalf (invoice factoring). 

 

Will Any of My Assets Be Repossessed?

It is unlikely that any assets of yours will be repossessed like property or vehicles, this is because your invoice is used as collateral, not anything else. In some extreme cases, if the invoice is not paid and there is no other way to recover funds, your business could experience repossession as a way for the lender to retrieve those losses. 

 

How Long Does It Take To Be Approved and Receive Your Loan?

Based on providing all the details about your company and a valid invoice, you can be approved and funded within 24 to 48 hours.

 

Can I Borrow Again in The Future?

Yes, very much so, it is common to use invoice financing over and over again when new opportunities and orders come up. Some small businesses will use this product for several decades. There is also the use of invoice discounting or factoring which involves selling your entire ledger of invoices, so being used over and over is part of the product.