The invoice factoring industry has seen revolutionary changes in the last few decades – changes that have benefited owners of small and medium-sized companies in need of working capital.  If you have not thought about factoring recently, it’s time to make sure your perceptions and perspectives are up to date.

Some 20-30 years ago, large banks had their own factoring divisions, some of which were formed out of factoring companies acquired by banks. A handful of major factoring companies remained independent. Compared to today’s very low factoring rates, fees at those bank factoring divisions were high – but so were the fees at free-standing factoring firms.

Fortunately for the consumer, competition among banks’ factoring divisions and the growing number of factoring companies, combined with historically low interest rates, make today’s cost of factoring about half of what it was 20 to 30 years ago. One point of comparison: the amount a client paid in factoring fees for 30 days then is roughly equivalent to what clients pay for 90 days now. Technology – email, scanning, online client service portals, mobile apps and more – truly revolutionized factoring with cost-saving efficiencies unimagined in the 1990s.

With factoring used in many more industries than ever before, perceptions about who uses factoring have also changed. Some 20 years ago, most factoring clients faced significant financial hurdles; for some, factoring was a last-chance way to turn around their balance sheet. However, now factoring clients run the gamut from struggling startups to well-established and successful companies. Financially healthy companies factor their invoices to keep up with growth, manage cash flow, or handle select accounts with long payment terms.

Here are some ways the factoring process has evolved in recent years to benefit small and medium-sized businesses:

High factoring rates and feesLow factoring rates and fees
Advances capped at 80%Advances up to 100%
Many clients were in financial troubleMany clients are financially secure / growing
Original paperwork required by overnight mailFunding from scanned and emailed copies
High operating costs passed on to clientsLow operating costs due to automation
Slow funding with mailed checksFaster funding with direct deposits
Generalist factoring firmsSpecialized firms with industry knowledge

Since 1993, Interstate Capital, one of North America’s leading factoring companies, has seen changes across the industry that make factoring more affordable and accessible than ever. Interstate Capital’s founders, who continue to manage the company today, are proud to provide a new generation of options and services to today’s business owners ready to grow their companies.

To learn how factoring may help your business with an alternative financing solution, click here for a free factoring assessment today.

About Interstate Capital

The Interstate Capital Group of Companies operates businesses in the factoring, freight brokerage, freight matching, and payable discounting industries.