Invoice Financing / Factoring at East West Bank

Invoice financing, often referred to as factoring, is a strategic financial solution designed to convert outstanding invoices into immediate working capital. At East West Bank, our invoice financing program is built to help businesses bridge cash flow gaps, accelerate growth, and manage receivables with confidence. Whether you are a small supplier looking to smooth seasonal fluctuations or a growing enterprise seeking predictable cash flow to seize new opportunities, our tailored factoring services deliver flexibility, speed, and operational simplicity.

What is Invoice Financing / Factoring?

Invoice financing allows a business to sell its accounts receivable — invoices issued to customers — to a financial institution in exchange for a percentage of the invoice value paid upfront. The bank advances funds, typically between 70% and 90% of the invoice amount, then collects payment from your customer. Once the invoice is paid, the bank remits the remaining balance to you, minus the agreed fees. This arrangement accelerates cash conversion, reduces days sales outstanding (DSO), and provides immediate capital without adding debt to your balance sheet.

Key Benefits

• Improved Cash Flow: Unlock funds tied up in unpaid invoices to cover payroll, suppliers, inventory, and growth initiatives.
• Flexible Funding: Financing grows with your sales — the more you bill, the more financing you can access, providing a scalable option for seasonal or rapidly expanding businesses.
• Credit Management: Benefit from professional collections and receivables management provided by the bank, reducing administrative burden and improving customer payment discipline.
• Quick Access to Capital: Receive advances on receivables often within days of approval, giving you a faster alternative to traditional loans.
• Non-Dilutive Financing: Maintain ownership and control of your business without issuing equity or incurring long-term debt obligations.
• Risk Mitigation: Options available for both recourse and non-recourse factoring to manage credit risk exposure depending on client creditworthiness and your risk tolerance.

Who Can Benefit?

Invoice financing is well suited to businesses across a broad range of industries including manufacturing, wholesale distribution, staffing firms, transportation and logistics, professional services, and business-to-business (B2B) suppliers. Ideal candidates typically have:

• Established receivables with reputable customers
• Consistent billing cycles and documented invoices
• Need for working capital to support order fulfillment or expansion
• Desire to outsource collections and receivable administration

How It Works

1. Application and Approval: Submit an application with basic company information, financial statements, and a list of invoices to be financed. The bank evaluates creditworthiness of both your business and your customers.
2. Purchase Agreement: Once approved, an agreement outlines advance rates, discount fees, notice requirements, and recourse terms. You deliver copies of qualifying invoices to the bank.
3. Funding: The bank advances a percentage of the invoice value to your business, often within 24–72 hours after documentation is validated.
4. Collections: The bank collects payments directly from your customers according to invoice terms, or you continue to collect on behalf of the bank if agreed.
5. Settlement: After the invoice is paid, the remaining balance is remitted to you minus agreed fees and any reserves.

Types of Factoring Offered

• Recourse Factoring: You retain responsibility for unpaid invoices; generally lower fees and more flexible underwriting.
• Non-Recourse Factoring: The bank assumes credit risk for approved customers; suitable when protection against customer default is important.
• Spot Factoring: One-time or occasional financing of specific invoices, useful for ad-hoc cash needs.
• Contract or Full-Service Factoring: Continuous financing tied to ongoing sales, often combined with credit assessment and receivables management.

Fees and Costs

Fees vary based on invoice aging, client credit quality, advance rate, and whether the arrangement is recourse or non-recourse. Common fee components include a discount rate (a percentage of invoice value), service fees for collections and administration, and any reserve requirements. East West Bank provides transparent pricing and will work to structure a solution that balances cost and benefit, aligned with your cash flow objectives.

Why Choose East West Bank?

East West Bank combines deep industry experience with personalized service. Our factoring team offers fast underwriting, dedicated account management, and operational systems designed to integrate with your billing processes. We focus on building long-term relationships and helping clients convert receivables into strategic working capital while preserving customer relationships and operational continuity.

Getting Started

Beginning the invoice financing process is straightforward: prepare your recent invoices, financial statements, and customer lists, and discuss your business goals with a lending specialist. The bank will assess fit, propose terms, and outline the steps to commence funding. With streamlined documentation and responsive service, many clients begin to see enhanced liquidity within days.

Frequently Asked Questions

Will factoring affect my customers? Communication policies vary; some arrangements are confidential while others involve notifying customers that invoices are assigned to the bank. The bank can help manage customer interactions to preserve relationships.

Is this a loan? No. Factoring is an asset-based transaction where invoices are sold; it is not recorded as debt on your balance sheet in the same way a loan would be.

How fast can I access funds? After approval and invoice submission, advances can often be issued within 24–72 hours depending on documentation and customer verification.

Invoice financing at East West Bank offers a pragmatic, scalable way to improve liquidity, reduce operational strain, and support growth. Whether you need short-term relief or an ongoing funding program, our solutions are structured to align with your business cycle, preserve customer relationships, and deliver predictable working capital when you need it most.