How does Factoring with bad debt protection work?
How does factoring with bad debt protection work?
Step 1: You obtain an insured credit limit from the factoring provider on your customers before delivering their goods or providing services.
Step 2: You provide goods or services up to the maximum value of the credit limit.
Step 3: You invoice your customer and send a copy of the invoice to the factoring provider
Step 4: The factoring provider advances to you the pre-agreed % value of the invoice usually the next day. This is typically between 70% - 90%
Step 5: The factoring provider collects the outstanding debt
Step 6: The factoring provider takes their fees and then pays you the remaining balance. However, if the debt is not paid, the factoring provider will credit you with the amount of the debt up to the agreed credit limit.
