Invoice financing explained: get paid now on net terms

Invoice financing lets you turn unpaid invoices into cash now instead of waiting 30, 60 or 90 days for your customers to pay. A funder provides money against the invoices you have already sent, and the financing is settled when your customer pays. It is built for businesses that do solid work for solid customers and simply get paid on a slow calendar.

If you sell to other businesses, you know the pattern. The work is done, the invoice is out, and the money is weeks away. Meanwhile your payroll, rent and suppliers are due now. Invoice financing closes that gap.

How invoice financing works

The details vary from one funder and one deal to the next, but the general flow looks like this:

1. You do the work and send the invoice. Your customer owes you on net 30, net 60 or net 90 terms.
2. You submit the open invoices for financing. The funder looks at the invoices and, just as important, at the customers who owe them.
3. You receive cash against those invoices. Usually a large share of the invoice value comes to you up front.
4. Your customer pays on their normal schedule. Nothing about their terms has to change.
5. The financing is settled. Once the invoice is paid, the funder is repaid and any remaining balance comes back to you, minus the cost of the financing.

That is the general shape. At Royal Funding Group, your specialist sets the exact structure for your business based on your invoices, your customers and your timing.

Who it fits best

Invoice financing works well when your business:

• Sells to other businesses or government agencies, not consumers
• Offers payment terms of 30, 60 or 90 days
• Has customers with a good track record of paying
• Is growing and needs cash to take on the next order before the last one is paid

Common examples include wholesalers, distributors, manufacturers, staffing companies, trucking and logistics firms, and contractors working for larger clients. Here is a hypothetical one. Say a food distributor lands a new grocery chain account on net 60 terms. The first big order means buying a lot more product than usual, two months before the chain pays. Invoice financing on the first round of invoices gives the distributor the cash to keep stocking shelves for its other customers while the new account ramps up.

Why it is different from a regular loan

With most business funding, the funder mainly looks at your business: your revenue, your time in business and your credit. With invoice financing, the strength of your customers matters a great deal, because their payment is what settles the financing.

That changes a few things:

• It grows with your sales. More invoices means more you can finance.
• It is tied to specific work. You are getting paid early for jobs you already finished, not borrowing against a general plan.
• It matches the cash to the gap. The financing lasts about as long as your customer’s payment terms.

It is not the right tool for every situation. If you sell mostly to consumers who pay at the register, there are no invoices to finance. If you need money for something unrelated to receivables, like a renovation or a big equipment purchase, a term loan or equipment financing fits better.

What to ask about cost

Every financing option has a cost, and invoice financing is no different. Instead of focusing on any single number, compare the total you pay against what waiting would cost you: missed orders, late fees with suppliers, or turning down new work.

Good questions for any offer:

• How much of each invoice do I receive up front?
• What is the total cost if my customer pays on time? What if they pay late?
• Are there fees to set up the account or to submit invoices?
• Do my customers deal with me or with the funder?
• What happens if a customer does not pay?

Your specialist answers each of these for your specific deal, and lays out how invoice financing compares with working capital or a line of credit for your situation. The funding calculator is a good place to sketch out how payments fit your cash flow.

How to get started with RFG

Starting is simple. The online application takes two minutes and asks five quick questions: amount, average monthly revenue, time in business, mobile phone and email. No documents are needed to start. A specialist calls you the same day, then asks for recent business bank statements through a secure link and talks through your invoices and customers.

Approvals in hours. Same-day funding. RFG funds U.S. businesses with 12 or more months in business, from $5,000 to $5,000,000, and works across a wide range of credit scores. We look at the whole business, including the quality of your customers, not only your personal score.

If you have a stack of open invoices right now, that is a good reason to apply today.

Turn your open invoices into cash

Royal Funding Group offers invoice financing for businesses whose customers pay on net 30, 60 or 90 terms, so you get paid now and keep taking on work. Your specialist structures the deal around your invoices and compares it with your other options. Apply in two minutes or call (929) 506-8133.