We Deliver The FUNDS
We Deliver The FUNDS
Invoice Factoring
0.69% to 1.59%
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Account Receivable Financing is our Business:
We Make Invoice Factoring A Simple Process
We offer receivable factoring services for all types of businesses that serve many industries.
With over 20+ Years in Business, 1st Commercial Credit is the preferred invoice factoring company in the nation for growing companies.
We provide invoice factoring services for all types of businesses that serve many industries. We fund unpaid invoices for small, medium and large companies just like yours everyday. Our customers enjoy incredible growth after they set up an accounts receivable loan agreement with us.
Our receivable factoring services allow our customers to offer credit terms to customers without running into cash flow shortages. We provide fast funding, flexible approvals even if the owner has bad credit, affordable rates and other financial solutions that help grow companies.
What Is Invoice Factoring?
Invoice factoring, also known as accounts receivable factoring (or "factor"), is a very simple yet effective solution that allows companies to trade their invoices for an injection into their cash flow at a discount. For companies that need cash sooner than the receivables are due, factoring receivables may be a good option.
Companies might choose to do this in order for them to meet their present and immediate operating expenses, while they are currently waiting on their receivable assets to be paid. This is very beneficial to companies that have a number of aging accounts receivables while also having pressing expenses to pay off.
After approval to partner with a factoring company, you can sell your unpaid receivables to increase your working capital and avoid delays caused by extended payment terms. The factoring company confirms the validity of your invoices, advances up to 90% of their total value, and directly collects payments from your customers through a notice of assignment. Once the customers pay within the agreed terms, the remaining balance of the invoice is transferred to you, minus a small factoring fee, which usually ranges from one to five percent.
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Invoice Factoring is our Business
Fast Approval Process
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3 to 5 Day Initial Setup
Free Invoicing Software
Accounts Receivable Financing is our Business.
Fast Approval Process
3 to 5 Day Initial Setup
Free Invoicing Software
How Does Invoice Factoring Work?
Factoring is a straightforward and easy-to-understand financing option. By learning how it works, you can decide if it’s the right fit for your business.
A factoring transaction typically involves three key parties, each playing a distinct role in the process. The Seller, which is your business, provides goods or services to a customer and issues an invoice. The Debtor, your business’s customer, is responsible for paying the invoice for the goods or services they received. Finally, the Factor, which is the factoring company, steps in to purchase the invoice from your business, providing you with immediate cash flow while taking on the responsibility of collecting payment from the Debtor. This arrangement allows your business to maintain a steady cash flow without waiting for customers to settle their invoices.
5 steps explaining how invoice factoring works:
- The Seller provides a service or delivers a product, then sends an invoice to the Debtor.
- The Seller submits that invoice to the Factoring Company for funding.
- The Factoring Company advances between 80-90% of the invoice value to the Seller, deposited into their business bank account.
- The Debtor mails their payment to the factoring company, which goes into a lockbox in the Seller’s name.
- The remaining 10-20% of the invoice value is released to the Seller, minus a small factoring fee.
Invoice Factoring Cash Advance and Fees Example:
Invoice Face Value: $500,000
Factoring Fee (Ex: 2%): $10,000
Initial Cash Advance (Ex: 90%): $450,000
Remaining Advance: $40,000
Total Received: $490,000
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Benefits of Using Invoice Factoring Companies
Having a simplified option for getting cash is the biggest benefit. Factoring is not the same as a bank loan. We leverage your credit eligibility based on your buyer's credit quality, not your company.
An accounts receivable factoring service converts invoices sold on credit terms for immediate working capital. It has become a simple, fast and easy way to access business cash flow. 1st Commercial Credit is a factoring company that specializes in evaluating accounts receivable and can make a prompt approval decision.
In comparison with a traditional bank loan, companies that factor receivables have quicker approval process. The documentation requirements are not as lengthy, and the main requirement is that an applicant has invoices for work or orders that have already been satisfied. It also helps to have creditworthy customers. As long as a business has been in operation, meets revenue requirements and is free of liens or legal issues, approval is likelier.
The rate is usually reasonable for the structure of the arrangement. 1st Commercial Credit offers very low rates between 0.69% to 4%. Our average client pays an average discount fee of 2.25% depending on the days outstanding the invoices pay.
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Immediate Cash
Factoring of receivables is an ideal solution for obtaining working capital. For short-term needs when cash is tight, it is especially helpful for avoiding standard loans. Factoring has helped many companies avoid costlier problems, such as not being able to make payroll.
Reporting Benefits
Many business owners are hesitant to add more debt that must be reported on the balance sheet. Since factored receivables are considered contingent assets with financing that is secured from non-lender and non-investor sources, factoring is an off-balance-sheet form of financing. Although it is not necessary to report, it is prudent to add information about the factoring arrangement in the balance sheet footnotes to provide full disclosure if your company is public.
Minimizes Loss Risks
With conventional business loans, all business assets are used as collateral. Understanding what is a factoring company and using it to finance invoices only encumbers accounts receivable as collateral and minimizes the risks of losing equipment, or inventory not related to the invoice or real estate assets.
Also, there is no need to give up equity. While some business loans provide cash based on equity, using them is like starting over and losing part of an investment. By using receivables factoring instead, business owners can protect their equity and get through temporary cash shortages. Selling equity during a cash crisis can be a detrimental choice for a business on a long-term basis.
Helps Small Businesses
1st Commercial Credit is a factoring company that helps out small business with minimal sales volume. It is difficult for small businesses that are newer and have lower annual revenue to qualify for conventional loans or lines of credit. Also, small business owners find that it normally costs less to use factoring instead of trying to put expenses on business credit cards.
How An Invoice Factoring Company Helps Businesses Offer Customer Credit
A benefit that is big enough to warrant a more thorough explanation is customer credit flexibility. Today, many companies lose potential customers to competitors because they lack the ability to extend credit terms.
While offering one credit option to clients is great, offering two or more payment term choices is ideal. Customers are more likely to make purchases when they feel comfortable, and a delayed payment may be easier for many clients to handle for a variety of reasons.
To better understand this, consider a government client that is adamant about having a 60-day payment term and a commercial client that demands a 30-day payment term. If the potential clients both promise loyalty to the business, not offering payment terms means that the clients will likely look elsewhere. With factoring, business owners have the option to factor invoices quickly after the services or product orders are fulfilled and the invoices are issued. A business owner receives quick cash, and the company that factors the receivables waits for the customer payments to arrive. This makes it easier to comfortably offer payment term options to clients without worrying about stifling cashflow.
Companies that have the ability to offer financing or delayed payments have more growth capabilities. Also, factoring companies can help businesses with scalability needs. Their cash offers are based on invoice amounts, and factoring providers can offer more cash based on the growing number of invoices in the future.
A common concern that business owners have in choosing a company that factors receivables is client creditworthiness. Determining the creditworthiness of the clients ordering the products or services can be a major undertaking to handle. However, the good news is that the chosen factoring company typically performs customer credit reviews internally. This eliminates another responsibility and adds a bonus to the list of benefits of invoice factoring.
Step 1: Apply
Factoring in 3 to 5 working days.
- We require a 2 page online application
- Signed proposal
- An accounts receivable aging
- Invoices with backup documentation
- Last 3 month bank statements
- Photo ID and Voided Check
- Master service or distribution agreements
- Signed Invoice Factoring Agreement
Step 2: Get funded
Get funding Same Day Once Setup
- Every client is issued an online account
- Upload invoices & backup with app we provide
- Get Funded within 24 hours after verification
- Add new credit worthy clients as you grow
- Free credit analysis for new clients
- Purchase order financing available after setup
We Attract Clients That Experience:
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Invoice Factoring Eliminates The Need To Get a Bank Loan
It is an organic line of credit that grows with the increase in your invoiced sales. You are never over-extending your company's finances, and you are allowing your company to grow at a natural pace.
Business owners realize that there is no need to borrow money from a bank in order to offer credit terms to customers. Factoring receivables is different to a receivable loan offered by a bank. It is considered an ongoing purchase of the invoices at a discount and not a loan. This enables the business owner to obtain immediate cash flow collateralized by the outstanding receivables without going through cumbersome paper work and waiting weeks for a decision.
Invoice factoring is also more flexible than traditional bank loans. As your business grows and generates more sales, the amount of financing you can access increases proportionally. This eliminates the need to constantly renegotiate loan terms or apply for new lines of credit, allowing you to focus on expanding your business without being constrained by rigid financial limits.
Additionally, invoice factoring does not require the same level of credit inspection that banks often demand. Approval is primarily based on the creditworthiness of your customers rather than your own business credit history. This makes it an excellent option for businesses that may be newer, have less established credit, or are experiencing temporary cash flow issues.
A Factoring Company for Small Business is always needed
Are you the owner or operator of a small business? If you are, you are most likely experiencing low levels of available working capital from time to time.
Your company's regular supply of cash flow that is necessary for everyday operations may be difficult to predict or maintain. Especially in today's uncertain economies around the globe, many small business owners and entrepreneurs are finding it increasingly difficult to run successful enterprises, particularly with rising costs and high interest rates for repaying inventory costs, supply orders and bills. A professional factoring company that offers small business financing is most likely the very best solution to such monetary imbalances and deficits.
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A reputable factoring company that specializes in small business financing can quickly help alleviate the financial shortcomings of your small business. If you run a production and sales enterprise, a good small business factor may offer inventory funding or purchase order funding for more available cash flow to use throughout the year.
1st Commercial Credit can offer additional lending products alongside the factoring arrangement, and will be repaid via accrued amounts in your accounts receivable from customer payments for goods.
What other services are provided to small business by a factoring agencies?
An experienced factoring company may also provide additional financing options for small business owners. Aside from inventory and receivables funding, a professional factoring company often will offer credit security and collections management to your business. Of course, the added credit monitoring will increase the credibility and standing of your business. It will also provide stability and allow you to expand operations more easily.
What types of small companies are most frequently financed by factoring agencies?
Factoring companies provide financing services to numerous types and sizes of business. Of course, the majority of sales enterprises and small manufacturers need receivables funding, collections management and other types of financial services on a regular, ongoing basis. In addition, some sales businesses with seasonal inventories may need periodic funding throughout the year in order to increase production rates during manufacturing months and to ship products and promote sales during selling seasons.
Other industries and types of companies that may also enlist the services of high quality factoring agents to strengthen and grow small businesses while balancing yearly financial needs include merchandise transport and shipping companies, local trucking enterprises, employment staffing companies (especially temporary staffing agencies), and all kinds of services businesses. For example, catering companies, car and limousine services, office equipment installers, residential or commercial cleaning services, and greenhouse plant suppliers for homes and businesses may all have need of financial support through factoring.
In today's modern laser-fast world of business transactions, small companies of all types can benefit greatly from the expert advice and financial services of high quality, experienced factoring agents. With the additional support and assurance of regular, dependable funding, credit security and collections management, numerous varieties of small enterprises can focus on gaining higher levels of visibility, credibility and sales or service contracts. In addition, these small business owners and operators can focus more time and attention on growing their client bases and expanding their markets for the benefits of increased profits and success.
Invoice Financing (Rates and Fees)
When considering invoice factoring for your company, understanding the associated costs is crucial. At 1st Commercial Credit, we offer competitive and transparent rates, typically ranging from 0.69% to 1.59%. Our factoring solutions provide flexibility and speed, giving you quick access to the funds tied up in your unpaid invoices without hidden fees. If you're curious about the costs, you can easily use our invoice factoring calculator and see if it would make sense for your business. Whether you need to improve cash flow, cover day-to-day expenses, or seize new business opportunities, our invoice factoring services are a cost-effective way to enhance your company’s financial stability.
FAQ About Invoice Factoring
An invoice factoring company helps businesses improve cash flow by purchasing their unpaid invoices at a discount, providing immediate funds. Instead of waiting for customers to pay, businesses receive a significant portion of the invoice value upfront. The factoring company then collects payment directly from the customers and releases the remaining balance, minus a small fee. This service enables businesses to manage cash flow, cover expenses, and grow without taking on additional debt.
Yes, small businesses can greatly benefit from invoice factoring. It provides them with immediate cash flow, which is often essential for covering expenses like payroll, rent, and supplies, especially during periods of growth or slow-paying customers. Unlike traditional loans, invoice factoring doesn’t require strong credit history or collateral, making it accessible for small businesses that might struggle to secure bank financing. This allows them to maintain steady operations and seize new opportunities without taking on additional debt.
Invoice factoring involves selling your unpaid invoices to a factoring company for immediate cash, with approval based on your customers’ creditworthiness, not your own. It’s not a loan, so it doesn’t add debt to your balance sheet. In contrast, a bank loan provides a lump sum of money that you must repay with interest over time, adding debt to your business and requiring strong credit history and collateral. Invoice factoring offers quicker, more flexible funding, while bank loans are more rigid and dependent on your financial history.
