7 Steps to Qualify Your Business for Invoice Factoring
Here’s how to qualify your business for invoice factoring. Invoice factoring involves a business selling its credit-worthy outstanding invoices to a factoring company at a discounted rate. The invoice factoring company can offer up to 90% of the amount of the invoices. This is an excellent source of credit for businesses that need it immediately for important payments. These payments may include items such as rent, payroll, and expansion.
Requirements to qualify for invoice factoring
- Outstanding invoices: These invoices are the most important requirement for the invoice factoring process. The feasibility and the sum of the invoices will dictate how much credit a business will receive from the invoice factoring company.
- Clients: For an invoice factoring company, the creditworthiness of your clients is key. They will only provide you with credit if your clients can demonstrate creditworthiness.
- Factoring application: Every invoice factoring company will have its own application form that consists of details such as general information, contact details, banking information, and most importantly, the monthly invoicing volumes.
- Accounts receivable: A highly important requirement of the process is the accounts receivable report that comprises details of all outstanding invoices, notes, and credit memos to understand when your clients will make their payments.
- Business account: An invoice factoring company will not deposit funds into a personal account. It is essential you have a business bank account before you apply for invoice factoring.
- Tax ID: It is also imperative to have an official tax identification number before you are eligible for invoice factoring.
- Personal ID: Finally, you must also have personal documentation so the invoice factoring company can verify that they are providing funds to a legitimate person. The personal identification documents that can be used are a passport, social security number, or driver’s license.
For more information on how to qualify for invoice factoring, give Kore Capital a call today!