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Your Biggest Invoice is 60 Days Late. Here’s How Factoring Can Get You Paid Tomorrow.

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When a Late Invoice Chokes Your Cash Flow

If you’re a small business owner or contractor, you know that cash flow is king. You’ve done the work, you’ve sent the invoice — but it’s still sitting unpaid 60 days later. Payroll is looming, suppliers want to be paid, and your bank balance is shrinking. Waiting another 30 days isn’t an option.

Invoice factoring can bridge that gap and get you paid tomorrow. Instead of waiting on slow-paying customers, you sell the invoice to a factoring company. They advance you most of the value now and collect from your client later. Because it’s a sale of an existing invoice, approval is based on your customer’s creditworthiness — not your personal credit.

What Is Invoice Factoring?

Invoice factoring is not a loan. It’s the sale of an approved commercial invoice at a discount. The factor gives you 70–90 % of the invoice value up front, called the advance. When your client pays, the factor remits the balance (the reserve) minus their fee. Fees are usually quoted as a percentage per 30 days; the cost is lower if your customer pays sooner.

Example: You sell a $50,000 invoice. The factor advances you 85 % ($42,500) today. Their fee is 2 % per 30 days. If your customer pays in 60 days, the fee is 4 % of $50,000 ($2,000). When the factor receives payment, you get the remaining reserve ($5,500). Your cost is $2,000, but you got your cash two months earlier.

When Factoring Makes Sense

Factoring works best when:

  • You invoice creditworthy customers (general contractors, commercial property owners, corporations).
  • Your invoice is approved and undisputed. If there’s a pay‑when‑paid clause or an inspection issue, factoring may not be possible.
  • You’re waiting 30–90 days for payment and need cash now.
  • You can provide documentation: contracts, pay applications, lien waivers and proof of delivery.

How to Get Paid Quickly

  • Gather documentation. You’ll need your signed contract, invoice, proof of delivery/acceptance, and lien waivers.
  • Submit to a factoring company. They’ll verify the invoice and your customer’s credit.
  • Receive funds. Once approved, funds can arrive within 24–48 hours.
  • Focus on work, not collections. The factor follows up with your customer for payment. You concentrate on finishing jobs and getting new ones.

Pros and Cons of Factoring

Pros:

  • Fast funding. Cash in your account within days instead of months.
  • Approval based on your customer’s credit. A low personal credit score isn’t a deal‑breaker.
  • Offloads collection. Factors handle receivables.

Cons:

  • Cost. Factoring fees reduce your margin.
  • Limited to approved invoices. Work that isn’t completed or hasn’t been accepted can’t be factored.
  • Customer notice. Your client must be notified that payment goes to the factor; some may push back.

Next Steps — Get Help Today

If your biggest invoice is late and cash flow is tight, factoring can get you paid tomorrow. At Versatil Financial LLC, we’ll review your invoices, check if factoring is right for you and connect you with vetted funders.

Contact us now:

We’ll let you know if factoring will solve your cash‑flow crunch and guide you through the process. This post is for educational purposes and not an offer of credit.

FAQ

Is factoring a loan?
No. You’re selling an invoice. You get an advance today; the factor gets paid when your customer pays.

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