Ledgered Invoice Factoring Line

If your business does more than $5 million a year in sales and has a large number of customers, lots of daily payments coming in, and no single client that makes up too much of your revenue, a Ledgered Factoring Line could be a great fit for how you operate.

Unlike traditional invoice factoring, where you submit individual invoices for funding, a Ledgered line works more like a revolving credit facility, but it’s still a purchase and sale relationship. Instead of sending individual invoices, you’ll provide a weekly report of those invoices to the factoring company showing your current receivables and invoices you’d like to obtain availability against. Based on that, they’ll determine how much you can draw. It’s a simpler, less hands-on process that gives you funding flexibility without all of the daily invoice paperwork.

Ledgered invoice factoring tends to be a better fit for larger, more established businesses the kind that already have a finance team producing dependable internal financials, have shown profitability in the past (or are trending back in that direction), and maintain a positive net worth.

It’s really meant for businesses that aren’t quite ready for traditional bank financing or maybe have outgrown or been asked to move on from their current bank relationship. In many ways, it serves as a stepping stone back into a conventional banking relationship, giving you a bit more flexibility and autonomy than traditional invoice factoring while still providing the working capital support your business needs.

With a Ledgered line, your current deposit account gets converted into what’s called a blocked account meaning the factoring company can see and access only the incoming collections. Those funds are used to post payments and keep your account accurate.

It’s important to note that having a Ledgered factoring line doesn’t change the factoring company’s credit oversight, testing and monitoring. They’ll still review your receivables and customer performance just like before but the main difference is the daily submission of documents for funding.