Waste Disposal Invoice Factoring

Get faster cash flow by getting fast invoice payments

WHAT'S IN THIS GUIDE

1. What Is Waste Management, Recycling and Disposal Factoring?
2. Who Can Benefit From Invoice Factoring?
3. How Does Waste Disposal Factoring Compare With Other Kinds of Business Financing?
4. How Do You Choose a Factoring Partner?
5. Is Waste Management Factoring Right For Your Business?

Waste disposal can be a messy business. It can also be quite profitable. But many waste disposal companies have to wait up to eight weeks to get paid for services performed. Larger companies may have the ability to wait for 30 to 90 days to receive payment, leaving smaller waste disposal businesses at a competitive disadvantage. 

Many small companies operate on tight budgets, and extending credit terms can be challenging. Operating expenses, truck maintenance, and payroll must be covered even when revenue comes in slowly. Invoice factoring for waste and disposal companies speeds up cash flow so you can pay expenses, or even grow your company, with peace of mind.

What Is Waste Management, Recycling and Disposal Factoring?

With invoice factoring, also known as accounts receivable factoring, you finance your receivables from creditworthy companies, providing you with working capital ahead of long payment terms. Fix or replace equipment, pay bills, and have the cash flow to handle it all. 

Invoice factoring leverages your business’s outstanding invoices and turns them into cash. 

  • You sell one or more unpaid invoices to a factoring compay, like FundThrough.
  • Quickly receive 100% of the invoice amount, minus a small fee.
  • The factor collects the money from your client(s). 
  • No invoices to process or collect.
  • You take on no new debt.
  • Get paid fast.

Factoring is not a high-interest loan to be paid back in monthly installments. It does not require collateral. Even if you are a relatively new provider, you can still qualify. The application process is quick and easy, and your credit doesn’t matter as the factoring company looks at the creditworthiness of your clients instead.

Who Can Benefit From Invoice Factoring?

Any waste disposal company with unpaid invoices for services already fulfilled can benefit from invoice factoring. These benefits extend to companies that have few other options due to credit profile or growth stage, including:

  • Garbage collectors with industrial or municipal contracts
  • Commercial roll-off operators
  • Industrial cleaning contractors
  • Recycling facilities
  • Treatment facilities
  • Companies that monitor and regulate the waste management process

How Does Waste Disposal Factoring Compare With Other Kinds of Business Financing?

  • In the past, factoring was largely misunderstood. Business bank loans and lines of credit were the traditional and accepted forms of financing, along with credit cards. Each of these different funding options have pros and cons to consider.

Loans

Costs for a new or growing waste disposal business can be significant. You may need to purchase equipment and inventory, pay employees, and keep up with rent, taxes, and marketing. You may consider taking  out a business loan. 

Pros

  • Many small business loans have relatively low interest rates when compared to many other types of funding.
  • Interest can be deductible on your taxes. 
  • Depending on your requirements, you may have access to large sums of money to be used to grow your business. 
  • On-time repayments can help improve your credit rating. 
 

Cons

  • Many small, growing businesses don’t qualify for loans. They often need cash faster than the process would allow anyway. 
  • Most lenders have strict guidelines for loans and a lengthy review process.
  • You may need to have a good credit rating. Anything else and you may not qualify and if you do you’ll likely pay a higher interest rate.
  • Rates can fluctuate depending on the market. The more you borrow, the higher interest you may have to pay as the lender takes on more risk.
  • A business loan and the debt will show up on your balance sheet, which affect the valuation of your business. 
 

Lines of Credit

A line of credit (LOC) is a lot like a credit card. You can borrow/withdraw money up to a certain maximum amount determined by your financial institution. You can cover day-to-day expenses and pay back your debt, only to borrow again when needed.

Pros

  • You can borrow when you need it.
  • When you’re short of cash, you can borrow only what you need as long as you don’t exceed your limit.
  • Making on-time payments can help improve your credit score.
  • Lines of credit can have low interest rates.
  • The payments on the line of credit vary and vary depending on your outstanding balance. 
 

 Cons

  • As with loans, oftentimes banks won’t give small, growing businesses a line of credit. They often need cash faster than the process would allow anyway. 
  • There will be limits on the maximum amount you can borrow, which might not always be enough.
  • Although you pay-as-you-go, if you miss payments, are late, or move outside the terms of your agreement, you might face high fees.
  • It’s easy to misuse a line of credit (just like it’s easy to misuse a credit card). 
  • If your business fails, you are responsible for any payments and debt incurred from using your line of credit.
  • You need to have been in business at least two years, and will need to provide bank account information, financial statements, tax returns, and more to qualify. 
  • A line of credit is like a loan that needs to be repaid with interest.
 

Business Credit Cards

Like all forms of funding, business credit cards must be used wisely or things can go sideways very quickly. 

Pros

  • It’s easier to qualify for a business credit card than for a line of credit or business loan.
  • You have quick access to the cash you need when you need it.
  • Many business credit cards have reward programs or incentives, like cash back or airline miles. 
  • A business credit card can help build credit, which is helpful if you ever need to apply for a bank loan.
 

Cons

  • You may need to provide a personal guarantee to qualify.
  • High interest, annual fees and late charges can add up, especially if funding a large expense.
  • Many business credit cards do not offer purchase protection. 
  • Business credit cards come with security risks like fraudulent charges from unauthorized use and stolen credit card numbers. 
  • You risk overspending.
 

Receivables Factoring 

Invoice factoring is not a loan. The application process is quick, there is no repayment obligation, no high interest rates, and no debt to record on your company’s balance sheet. Plus, many more companies will qualify.  

Pros

  • You have access to fast cash when you need it based on the value of your invoice(s).
  • Cash advances can greatly improve shortfalls in cash flow due to slow-paying clients.
  • Does not require your business to have a long credit history, which is best for start-ups and fast-growing firms.
  • Factoring relies on the creditworthiness of your customers, not yours.
  • Invoice factoring is easier to obtain than most other forms of funding.
  • Funding can increase with the value of your invoices.
  • If your business is seasonal, factoring can infuse cash into your business to get you through the downtimes. 
  • Your accounts receivables are used as collateral, unlike many loans or lines of credit.
  • You give up no equity or control in your business in exchange for funding with factoring. 
  • No  matter the size of your waste disposal business, you can use factoring.

 

Cons

  • Invoices need to be verified (customer contact sometimes required).
  • Can be complicated to account for in bookkeeping.

How Do You Choose a Factoring Partner?

Choosing a factoring partner is a lot like choosing any lender. It pays to do your homework. There are also several questions to ask prior to starting the application process:

Does the factoring company work with commercial waste disposal, recycling and waste management companies?

Most factoring companies work with most industries, but not all. Some factors specialize in only a few industries. 

FundThrough works with companies in these sectors. 

 

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— 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 costs of using their service. FundThrough offers transparent pricing so you know prior to signing an agreement. 

FundThrough pricing – 100% advance rates minus a flat fee. One up front price.

 

Does the factoring company have minimums?

A minimum is the amount you must factor every period (month, each quarter or every year). Some factoring companies offer plans that require minimums, while others do not. 

FundThrough doesn’t require minimums. Only fund when you need to.

Cash flow is the number one problem for most start-ups and small businesses, especially if they’re growing. This is also true for companies in waste management industries. Invoice factoring companies typically consider several situations before offering you an advance.

  • Nature of 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 for factoring. (But not impossible. FundThrough works with businesses on IRS and CRA tax payment plans all the time. We can even help you with getting 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, which puts a tremendous burden on your business.
  • If you’ve delivered a product or provided a service to another business.
  • If you have slow times, downtimes, or your business is cyclical.
  • You experience times of cash flow crunch.
  • You need access to working capital to grow.
  • You can’t qualify for a loan.
  • Your customers or clients are creditworthy.

FundThrough takes the legwork out of accounts receivables financing. It’s fully automated platform is easy to navigate, it’s 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.

Simple. Intuitive. Waste Disposal Invoice Factoring.

Built For Your Business.

Explore fast payments with an experienced fintech

Interested in possibly embedding FundThrough in your platform? Let’s connect!