Before applying for AR financing, you’ll need to determine how much money you need and which invoices you’ll finance. Some companies choose only to factor the invoices of customers that take longer to pay. Others factor them all, and others will factor just what they need for a specific purchase. Decide what your goal is upfront.
Though the documentation you’ll need to apply for invoice factoring will vary based on state and local requirements, you will definitely need to provide your accounts receivable/payable aging report. This document should detail the status of at least 90 days’ worth of your business’ invoices. The factoring company will use this to verify your customers and the amount they owe you. They will also likely run a credit check on them to evaluate the difficulty of securing payment. Additionally, the factoring company will probably request sample invoices from your business for assessment.
Finally, you’ll need to complete the factoring company’s application paperwork. Most of the time, you can accomplish this online. You’ll typically hear back within a day or two with an offer. The process is comparatively quick and simple. So, you can take your time to review your options, shop around, and find the best factoring match for your needs.
- Business license, articles of partnership or incorporation, or a tax identification number
- Accounts receivable/payable aging report
- Recent tax returns
- Sample invoices
- Credit report
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