What is Factoring? | How does Factoring work? | Factoring terminology | Factoring articles
Invoices paid in 30 days | Invoices paid after 30 days
Let us assume that the your company has a corporate customer that normally pays 30 days after they have been invoiced and you invoice them for $10,000.00. By factoring their accounts receivable, your company can receive an advance in a matter of hours. Here is how the math works:
Your company's invoice $10,000.00
MP Star Advance of 80% 8,000.00
Less an Initial Factoring Fee of (350.00)
Your company receives an advance of 7,650.00
Invoice balance held in reserve* 2,000.00
Factoring Fee for an invoice outstanding for 30 days 350.00
* The reserve is refunded to the client when the invoice is paid.
