When the invoice says “2% 10 days, NET 30 days”, do you still have customers take a 2% discount and then pay in 30 days?
With A/R financing, you get paid within 2 to 3 days. Therefore, no need to offer your customers a discount, so change all your invoices to “NET 30”. Q: A/R financing costs more than a bank loan. A: You cannot compare the two. A bank loan is a loan. A/R financing is the purchase of accounts receivable. If you want to compare loans from Bank A and Bank B, then you can look at the terms and see how the interest rate, fees and amount differ. As an example: A bank loan of $100,000 at 9% will equal $4940 of interest in one year. When you sell invoices at 4% (fee) you have use of the funds for 30 days. The fees paid is your cost for use of the funds. Therefore, if you sell $100,000 worth of invoices during the year, your cost would be $4000 (assuming all customers pay within 30 days). Similar to a revolving line of credit that you use and pay off every 30 days.
