Why is a Factoring Company Better Than A Broker in 2024?

Estimated reading time: 3 minutes

What Is A Factoring Company?

Factoring is the purchase of account receivables. A third-party financial business—a factoring company—takes over your unpaid invoices by paying you the amount that’s due, minus one small fee. Factoring can be especially useful for business-to-business (B2B) or business-to-government (B2G) invoices. It is not a loan and factoring companies are better than a broker because they free up money that’s already yours.

Approvals Are Easy

To qualify for loans, you must fill out what feels like hundreds of forms throughout a weeks-long process. You’re surprised they don’t want your blood type and a copy of your eighth-grade report card! Working with a factoring company is much more straightforward. Most businesses are approved in less than 24 hours and paid within a few days. The money is directly transferred into your whatever account you choose.  

Your business does not have to be in financial trouble to consider factoring. In fact, most business clients of factoring companies are on solid ground and growing. With a simple online application, startups and certified-minority contractors can also receive funding. This is why a factoring company is better than a broker.

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No Hidden Fees or Interest

Since invoice factoring is not a loan, there’s no interest. There’s also no hidden fees, application fees, start-up fees, documentation fees, closing fees, or termination fees. After providing a copy of your invoice to the factoring a company, such as United Capital Funding, they immediately pay you up to 90%. Then, they act as your accounts receivables department. Once your client pays them, the factoring company gives you the remaining amount, keeping a small fee for their services. You’ll know the exact fee from the beginning—and you’ll only be charged once. Everyone is better off.

They Partner, Not Overpower

Brokers charges fees to be a middleman between businesses and lenders. Factoring companies take over your accounts receivables.  When you take a loan out from a bank or other financial institution, they’re only worried about you paying it back. Factoring companies treat you like a business partner, not a delinquent child. When you work with an invoice factoring company, they pay YOU real money from their own capital. Once they pay you, you don’t have to worry about chasing your invoices—or having a bank or lender chase after you.

Your Neighborhood Invoice Factoring Company

United Capital Funding provides factoring services nationwide. They partner with small businesses in every industry.  Printing, staffing, telecommunications, transportation, communication, pharmaceutical, manufacturing and those with government contracts all benefit from factoring. Selling your accounts receivables is one of the best ways to grow your business and take charge of your capital.