Agriculture Invoice Factoring

The agriculture industry is the sector of our economy responsible for cultivating the soil, growing crops, and raising livestock. It also provides most of our cotton, wool, leather, wood, and paper products. It puts food on our table, but it's so much more.

In the U.S., there are about 2.5 million farms. The most recent data for Canada (2016) shows 193,492 farms across all provinces. In both the U.S. and Canada, the majority of farms are family-owned. Although the U.S. Department of Agriculture and Agriculture and Agri-Food Canada support the agriculture industry through initiatives and innovation, it's often not enough to make up for a slow-paying supply chain, seasonal dips, and ongoing working capital requirements. Cash flow stagnates and business slows.

Agriculture receivable factoring provides working capital for every link in the agriculture supply chain.

What is Agriculture Invoice Factoring?

If you are a startup farmer, shipper, or distributor with unpaid customer invoices piling up, there's a good chance you qualify for agriculture receivable factoring. Small business factoring for the agriculture industry is an effective and practical option to maintain cash flow when you don't have the time or liquid assets to wait to be paid by your customers. Slow-paying clients can stifle cash flow and working capital, as well as any plans to scale your business in the future. High-interest bank loans only add to your total debt, and qualifying can be difficult if you're a relatively new start-up or have a limited credit history.

Agriculture factoring allows you to get an advance on your unpaid receivables so you can finance payroll, buy supplies, and maintain daily operations. It is a type of short-term financing with flexible terms and eligibility requirements.

Factoring doesn't require collateral, and most agriculture businesses qualify, as your customers' credit is considered rather than your own. Factoring can be especially helpful if you depend on cash flow to grow your business or you can't qualify for a loan or line of credit.

Why is Invoice Factoring Important?

Companies in the agriculture sector have different challenges than many other industries. Uncertain weather, predictable downtimes and unpredictable yields, government policies, equipment upkeep, and fluctuating prices can all impact farming and cause wide swings in income. That's why finding options to maintain cash flow and sustain growth is important.

Receivable factoring helps support agricultural operations, including:

• Farmers and growers
• Processors and packers
• Manufacturers
• Shippers
• Distributors

Plus, invoice factoring can provide the fast cash necessary to run your daily operations. With factoring, you can quickly pay for:

• Additional employees
• New equipment or inventory to support higher sales
• Ongoing day-to-day operational expenses
• Other expenses associated with your business, even in downtimes
• Increasing production to meet demand or expand into new markets

How Do You Choose an Agriculture Invoice Factoring Partner?

Cash flow is the number one problem for most start-ups and small businesses, especially if they're growing — this is also true for agriculture companies. Invoice factoring companies typically consider several things before offering you an advance. Here are the right questions to ask as you vet a partner to find out if they're a fit.

Does the factoring company work with agriculture companies?

Most factoring companies work with most industries, but not all — some factors specialize in only a few industries. FundThrough works with agriculture companies.

What advance rates does the factoring company offer?

Advance rates can range from 60% to 100%, depending on the factoring company and sometimes the industry. FundThrough advances 100% of the invoice amount, less a fee.

What factoring fees does the factoring company charge?

A factoring company should be able to provide what factoring fees it charges upfront, but some companies may make it difficult to determine the total cost of using their service. FundThrough offers transparent pricing so you know before signing an agreement — 100% advance rates minus a flat fee, one upfront price.

Does the factoring company have minimums?

A minimum is the amount you must factor every period — month, quarter, or year. Some factoring companies offer plans that require minimums, while others do not. FundThrough doesn't require minimums. Only fund when you need to.

Is Agriculture Invoice Factoring Right For Your Business?

Invoice factoring companies typically consider several situations before offering you an advance:

• Nature of the business — you must be a registered business selling goods or services to other businesses.
• Service completion — invoice factoring is only available for goods or services that your clients have marked as complete or delivered.
• Encumbrance-free invoice — since invoices are the only collateral in a factoring arrangement, encumbrances such as tax liens can make it difficult to qualify (but not impossible — FundThrough works with businesses on IRS and CRA tax payment plans all the time, and can even help you get an arrangement set up).

Factoring invoices is a sound financial strategy if you:

• Spend time tracking down slow-paying customers and waiting 30, 60, or 90 days to be paid, putting a tremendous burden on your business.
• Have delivered a product or provided a service to another business.
• Have slow times, downtimes, or a business that is cyclical.
• Experience times of cash flow crunch.
• Need access to working capital to grow as an agriculture company.
• Can't qualify for a loan.
• Have customers or clients who are creditworthy.

FundThrough takes the legwork out of accounts receivable financing. Its fully automated platform is easy to navigate, its fee structure is transparent, and a customer service rep is there when you have questions. Find out what FundThrough's clients have to say, and start factoring your invoices today.