How Factoring Works Common Misunderstandings About Factoring The Cost of Factoring Who Can Qualify For Factoring?


Who can qualify for factoring services?  Can a newly started company get factoring?

First, factoring is available only to B2B companies.  In other words, if your company sells to the general public, you are not going to be able to secure factoring.

As with any financing service, it's always better to have a track record.  However, because decisions on factoring eligibility take into account the credit-worthiness of a business' clients, it is possible for a new business to qualify for factoring.


Most likely a newly started company would need to provide bank statements for the past three months.  The spot factor would probably ask them for signed contracts from future projects that they have signed up for that they are planning starting work on or have already have started work, but may not have invoices for.  


Now, the factoring company won't fund any invoices where work isn't complete, but the company requesting funding could be working on one project at this time, another one they’ve just started, another where they’ve completed two weeks' worth of work and just billed out for it, any another project that is going to be billed next week. 


The spot factor can fund the one that's been completed and the one that’s being billed out.  This gives the company money to put into the other project or pay their payroll and make their contracts work, basically.



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