Solutions · Slow-paying customers
You finished the work.
Why are you financing it?
If your cash is tied up in invoices that customers have not paid yet, invoice factoring can release it. You submit an invoice for completed work. Advance rates are typically 80 to 90 percent of eligible invoice value, depending on the industry, customer credit and facility terms, and once approved, eligible invoices can typically be funded within 24 to 48 hours. The balance less a fee is paid to you when your customer settles on their normal terms.
Based in Oklahoma City. Funding businesses nationwide.
By the Hexagon Commercial Finance team.
Every unpaid invoice is a loan you made to your customer.
When a large customer pays on 60 day terms, they are not simply being slow. They are using your capital to fund their operations for two months, interest free, as a condition of doing business with them.
For a company invoicing 250,000 dollars a month on 60 day terms, roughly half a million dollars of its own money is permanently in someone else's hands. That is money that cannot buy materials, hire a crew, take on the next contract, or absorb an unexpected equipment failure.
Growth makes it worse rather than better. Doubling revenue doubles the amount of capital locked in receivables, which is why profitable companies run out of cash.
Releasing the capital you have already earned.
Factoring converts that frozen receivable into working cash. You keep the customer relationship, the terms you negotiated, and the contract. What changes is that you stop waiting to be paid for work you have already completed.
The cost is a fee calculated on the invoice value for the days it remains outstanding. Weighed against the alternative, turning down work, paying suppliers late, or missing early-payment discounts, that fee is frequently the cheaper option on a pure arithmetic basis.
Because the arrangement settles as each invoice is paid, nothing accumulates. There is no balance growing in the background and no repayment date to plan around.
When factoring is the right tool, and when it is not.
It fits when you invoice other businesses or government agencies on terms, the work is complete and accepted, your customers are creditworthy, and the constraint on your growth is timing rather than profitability.
It fits poorly when you sell to consumers, when payment is taken at the point of sale, when invoices are disputed or contingent on future performance, or when the underlying business is unprofitable. Factoring accelerates cash flow. It cannot fix a margin problem, and any factor telling you otherwise is not being straight with you.
At a glance
- What is funded
- Eligible invoices for completed, accepted work
- Typical advance
- 80 to 90 percent of eligible invoice value, depending on industry, customer credit and facility terms
- Typical funding speed
- Once approved, eligible invoices can typically be funded within 24 to 48 hours
- Customer terms
- Unchanged. Your customer pays as usual
- Structure
- Purchase of receivables, not a traditional term loan
- Service area
- Nationwide, from our Oklahoma City office
Questions people ask
Stop lending your capital to your customers.
Book a Cashflow Consultation. We fund businesses in all 50 states.