All You Wanted To Know About Receivables Factoring Rates

By Author: Jeff Bross
Total Articles: 21
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Account receivable factoring is a wonderful solution for businesses that require additional capital for continuing their day to day business activities and for expanding their business. Factoring eliminates the wait period of 30-60 days and allows businesses to enjoy quick cash without undergoing the tedious process of inquiry and documentation followed by the banks for granting working capital to businesses.

Invoice factoring and accounts receivables factoring involves receivables factoring rates. Receivables factoring rates can be anywhere between 70-90% of the actual value of the invoice or the accounts receivables. If for instance, you sell your invoice valued at $5000 to a factoring company and the receivables factoring rates offered by the factoring company is 85%, you will get $4250 as first instalment. The remaining amount would be kept as a reserve till the time your customers actually pay the account receivables.

Once the factoring company gets its money from your client, they would pay you the remaining amount after deducting the factoring fee. When you sell your invoices or accounts receivables to ...
... the factoring company, the factoring company advances you immediate cash but it gets cash only when your customers and end clients pay their invoices. Because the factoring company is taking a risk and bearing the uncertainty of obtaining the cash, it charges a fixed percentage of fees for invoice factoring.

Receivables factoring rates is a relatively simple concept in invoice factoring and account receivables factoring. It comprises a fixed component and a variable component. The variable component is levied on every transaction based on the number of transactions made. To enjoy lower receivables factoring rates, you must sell fewer high value bills.

Receivables factoring rates further depend on the fact whether you choose progressive billing or non-progressive billing. In progressive billing, the factoring company charges you on a continual basis as and when the bills are produced. In case of non-progressive billing, the factoring company charges you and your clients only once. Receivables factoring rates are lower in case of non-progressive billing compared to progressive billing. Also, it is an easier option both for the factoring company and the business interested in account receivable finance.
Some other factors that affect receivables factoring rates are credit rating of all the parties involved, past credit rating and background check, reference verification, study of your and your clients’ businesses, etc. Accounts receivable factoring rates can be negotiated as well.
To get the best accounts receivables factoring rates, you can log on to factoringfast.com

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