Monthly Archives: April 2016

Top Tips Small Business Factoring Service

We recommend American Receivable as the best factoring service for small business. We chose American Receivable from among dozens of factoring services. To understand how we chose American Receivable, see our methodology and a list of factoring services on our best picks page.

Why American Receivable?

American Receivable offers flexible short- and long-term factoring services at competitive rates with fast, reliable funding. There are no strict minimum requirements, either, making this provider ideal for small businesses that are struggling with cash flow and having trouble qualifying with other providers. The company has been helping small businesses with their factoring needs since 1979.

American Receivable’s fees start at 1 percent of the total invoice value. There are no application, maintenance or early termination fees. The company initially pays 95 percent of invoice values up front, sending in the balance after customers pay. American receivable is also a nonrecourse factoring service, so you are not responsible for any unpaid invoices.

Minimum requirements

American Receivable makes it easy for small businesses of all types and with all credit ratings to qualify for factoring. The company will look at your business as a whole, whereas many factoring companies require you to meet a set of rigid minimum requirements before they will even look at your application.

First, we like that the company focuses on your customers’ creditworthiness, not your business’s revenues or credit history (or your personal finances or credit score). Although the company does require financial information about your business, this is not the sole consideration as to whether you get approved. This makes American Receivable ideal for small businesses, whose numbers typically automatically disqualify them from most factoring companies but who need a factor to help them with those numbers in the first place — it’s a catch 22 of sorts!

Another reason we like American Receivable is that it offers generous factoring terms, allowing the company to truly help your business with its cash flow needs. Many companies limit the number of invoices you can submit and the dollar amount of those invoices, particularly if you are a small business. However, American Receivable does not have any minimum requirements and can fund up to $4 million in invoices for a single business.

American Receivable also wins when it comes to flexibility. Whereas many factoring services won’t accept invoices that are more than 60 days past-due, American Receivable goes the extra mile by approving invoices that are up to 120 days past-due. This makes perfect sense for small businesses that wish to get both past-due and delinquent accounts off their hands and quickly turn those accounts into cash.

Application process

There are two ways to submit an application to American Receivable: online or via fax by printing out the PDF form.

The easiest way is to submit the application online. It is a comprehensive application, so you’ll need legal information, such as your business’s name and any DBAs (“doing business as” names), your business structure, and your federal ID number. You’ll also have to provide information on all officers, owners and directors of your business; indicate any changes in ownership or business name in the past 12 months; and describe any issues, such as lawsuits, bankruptcies and back taxes owed.

American Receivable will also need details about your receivables and banking information. This includes the number of invoices and the average amount to be factored every month, if other invoices have been factored in the past, and any past due taxes or liens.

In addition to the application form, American Receivable requires the following documentation:

  1. First page of articles of incorporation
  2. DBA, assumed- or trade-name certificate
  3. Accounts receivables
  4. Accounts payables
  5. Most recent profit-and-loss statement and balance sheet
  6. Current customer listings with contact names, email addresses, and telephone and fax numbers
  7. Copy of driver’s license

What is the factoring service

We recommend BlueVine as the best B2B factoring service. We chose BlueVine from dozens of factoring services. To understand how we chose BlueVine, you can find our methodology and a list of factoring services on our best picks page.

Why BlueVine?

BlueVine makes it easy for small B2B businesses to qualify for factoring services. The company offers both invoice financing and a line of credit with low rates, fast funding and no obligations or long-term contracts.

Minimum requirements

Most factoring services have strict requirements that automatically disqualify many small businesses. We like that BlueVine makes it easier to qualify for invoice financing or a line of credit by being more accommodating to B2B small businesses.

How to qualify for BlueVine

We like that BlueVine takes a holistic approach to evaluating businesses. The company considers everything from your customers to your business’ cash flow, financial history, reputation and quality of invoices.

To qualify for BlueVine’s invoice financing, you only need to have been in business for three months and have a minimum revenue of $10,000 per month.

To qualify for a line of credit, you’ll need to have been in business for at least six months. This option has a lower revenue requirement of at least $5,000 per month.

BlueVine also works with business owners who have a below average credit score. The minimum credit requirements are a credit score of 530 for invoice financing and 600 for a line of credit. Although BlueVine looks at your personal and business credit scores, we like that the company puts more weight on customers’ credit worthiness than its owners’.

Invoice requirements

In addition to evaluating your business, BlueVine will also assess your invoices. For invoices to be approved, here’s what BlueVine is looking for:

  1. Services rendered are complete or product delivered and accepted by customers
  2. Minimum of $500 with due dates of at least one week away up to 90 days
  3. Payment term of less than 12 weeks
  4. US- or Canada-based B2B customers

 

What is the great of factoring services

Fundbox is a new company that’s changing the way factoring is done and that’s great news for very small businesses. We like that Fundbox has a very low barrier to entry, so it’s easy to qualify as a microbusiness. Fundbox also has a simple application process compared with its competitors. Just sign up for a free account and connect your accounting software to start submitting invoices online no paperwork required. We are also a fan of Fundbox because the company advances 100 percent of invoices and offers low rates and friendly repayment terms that actually reward you for paying early. Current customers also rave about Fundbox’s excellent support team and that funds are wired to your bank within 24 hours.

Best B2B Factoring Service: BlueVine

BlueVine is another factoring company that’s modernizing how invoice financing is done. Its minimum requirements are very simple: be in business for at least three months and have a credit score of 530. There are no revenue requirements, and the company offers flexible factoring for as little as $5,000 to $500,000 for invoices due up to 90 days. We also like that BlueVine caters to your business’s needs by offering another form of financing: lines of credit up to $50,000 with a six-month repayment plan. BlueVine also offers fast, friendly customer service that has earned them five-star ratings from TrustPilot and QuickBooks.

Our methodology

To find the best factoring services for small business, we started by listing companies that are well-known in the industry and have positive feedback from customers. We also added companies that appear on reputable online sources, such as review sites and business websites.

To grow our list, we asked small business owners which factoring companies they use or have worked with in the past. We also asked them what they liked and disliked about these vendors, and whether they’d recommend them to other small businesses. This helped us gain insight as to what business owners expect from a factor and what they think makes the “best” factoring service.

Next, we researched the vendors on our list and narrowed them down based on use-case scenarios, which are our Best Picks categories. Our extensive research included reviewing each factoring company’s website, studying their history and reputation, watching videos and reading both customer and business reviews.

We also personally reached out to companies as potential customers in search of a factoring service. We spoke to sales and customer service representatives and asked about service terms, pricing details, the fine print and other important questions. This helped us learn more about their service by getting more information that isn’t readily available on their website or from other sources, while also helping us evaluate their quality of support.

As part of our research, one of our main objectives is to put ourselves in the shoes of small business owners. To this end, here are the criteria we used to evaluate each factoring service:

  • Rates, transaction fees and other costs.
  • Percentage of invoices the company will advance up front.
  • Repayment terms.
  • Application process.
  • Minimum requirements.
  • Ease of approval.
  • Funding and processing time.
  • Whether a contract is required.
  • Notice of assignment (if customers will be notified to redirect payments to factoring company).
  • Additional services, such as loans and lines of credit.
  • Positive feedback from customers.
  • Reputation and how long each company has been in business.
  • Third-party integrations, such as accounting or invoicing software.
  • Customer service.
  • Service limitations.

Best Invoice Financing For Small Business Ideas

We recommend Fundbox as the best invoice financing for very small businesses. We chose Fundbox from dozens of factoring services. To understand how we chose Fundbox, you can read our methodology and a list of factoring services on our best picks page.

 

Why Fundbox?

Fundbox is the easiest invoice financing to qualify for as a very small business. The company also offers fast payments, transparent pricing, a simple repayment plan and excellent customer service.

Fundbox costs 5 to 7 percent of the invoice value, plus $5 to $10 per $1,000 in invoices. The company funds 100 percent of the invoice value up front. Minimum requirements include being in business for at least six months. There are no credit checks, and the company doesn’t consider your annual revenue.

 

Minimum requirements

We like Fundbox because it offers fast funding with a low barrier to entry. This makes it ideal for very small businesses, as it is easier to qualify for than many factoring services. And despite its lax requirements, Fundbox funds 100 percent of invoice values. That makes it an excellent choice for businesses that are too small to be accepted by most factoring companies but still need a financing solution to keep cash flow going when customers have yet to pay their invoices.

Fundbox has three very simple minimum requirements:

  1. Your business must have been in operation for at least six months.
  2. Your business must be U.S.-based with U.S.-based customers and invoices in U.S. dollars.
  3. You must use supported accounting software to create and send invoices (see below).

Fundbox does not consider factors that often automatically disqualify very small businesses from obtaining invoice financing. Unlike traditional factoring companies, Fundbox doesn’t have any minimum revenue requirements and does not exclude businesses from certain industries, nor does Fundbox require any collateral or personal loan guarantees. The company also does not consider business owners’ (or their customers’) personal credit scores, either.

 

Easy application process

One of the best things about Fundbox is that it has a very easy three-step application process:

  1. Sign up for a free account at fundbox.com.
  2. Connect your accounting software and bank account.
  3. Select invoices that you wish to be funded.

This means there are no financial statements, tax forms, legal documents or other paperwork required to set up an account, and you don’t have to speak with anyone at the company in order to get started.

To sign up for an account, all you’ll need is your business email address, business phone number and a secure password.