How to Submit Invoices for factoring
When you start factoring, not much should really change in how you handle your invoicing day to day. You’ll still create and send invoices to your customers just like you always have. Once that’s done, you simply submit those invoices along with supporting documents (contracts, purchase orders, time-sheets, bill of lading, POD, etc., etc.) to your factoring company so they can fund you.
Generally, most factoring companies try to fund clients within 24 hours after they receive invoices. There are occasions, when a factor may provide same day funding.
Most factoring companies actually prefer that you continue invoicing your customers directly, it keeps things simple and consistent for everyone.
That said, in some industries like transportation, some factoring companies may prefer to generate and send the invoices for you. This can save time and help ensure all the right documentation (like rate confirmations bills of lading and proof of delivery) goes out correctly which helps ensure timely payment. This is a value add for smaller owner/operators and often gets you funded faster.
No matter which way you handle invoicing, the key is making sure your customer actually gets the invoice and that it’s done right. Here are a few simple but important tips:
- Invoice right away — send it as soon as the goods or services are completed.
- Double-check where it’s going — read your contract or purchase order carefully and follow their billing instructions exactly.
- Confirm receipt — a quick email asking your customer to confirm they got the invoice can save you a lot of time and potentially avoid a payment delay down the road.
- Be accurate — make sure all details are correct and any specific invoicing requirements are met. Lots of delayed payments can be attributed to incorrect invoicing which gets moved to the bottom of the payment pile.
- Keep your factoring company in the loop — cc or bcc them on invoice emails. That little bit of transparency might answer questions before they come up, it may avoid the factoring company needing to talk with your customer and helps build a stronger relationship with your factor.
Most factoring companies like invoices submitted to them in batches, either as a single PDF, through their online portal, or even straight from an app on your phone. It’s quick, organized and makes the funding process run a lot smoother.
How often you submit invoices for funding is really up to you. Most factoring companies start tracking it in their software from the date it’s created, but your discount fees usually don’t kick in until you actually receive the funds. So, you’ve got some flexibility in deciding when to submit, just balance when its best for your cash needs.
When running smoothly, factoring should be a behind-the-scenes process, not something that disrupts how you run your business.