CASH FLOW
HOW DO YOU SPEED UP THE
PAYMENT OF YOUR COMPLETED
ORDERS?
One option is to create well established working
relationships with Appraisal Management
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appraisers within a reasonable amount of time for
complete, approved work. However, an appraiser will
realistically have many relationships with
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The time it takes for each of these entities to pay for
completed work varies from 10-90 days. In some
instances, collection of an invoice can take even
longer than 90 days. Since not all AMCs and lenders
pay invoices within the same time frames, the next
best solution for an appraiser to increase the rate
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invoices.
WHAT IS FACTORING?
Factoring (also known as invoice discounting) is
selling your completed orders to a Factoring
Company in order to get paid quickly for the work
you have completed. When an appraisal order is
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options. One, you can submit the invoice for
payment directly from you to your client and wait for
an average of 30 days to be paid. Or two, you can
send the invoice to the Factoring Company for
accelerated payment for a small fee. For example,
you have a completed order with a value of $450.
You choose to sell to the Factoring Company. The
Factoring Company may purchase the order for
$427.50. In this example, the receivable is
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Factor fee. Payments for completed orders are
typically made as quickly as the same business day.
Factoring is a solution preferred by many businesses
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something typically chosen over taking out a loan
to cover business expenses or promote business
growth.
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HOW CAN AN APPRAISER START
FACTORING THEIR INVOICES?
An application to factor can typically be reviewed
and approved within a couple of days depending on
the Factor. To secure the accounts and to ensure that
the debtor pays the Factor for purchased invoices,
a Factor will take a security interest in the accounts
and will send a Notice of Assignment to the account
debtor. The security interest in accounts is perfected
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gives notice that the Factor has an interest in the
appraiser’s accounts receivable. The Notice of
Assignment simply tells your customer that they
need to send the Factor the payment for factored
orders.
DO FACTORS OFFER THEIR
SERVICES FOR ALL AMCS AND
LENDERS?
No. Each factor has their own rules and criteria to
determine which AMCs and lenders for which they
will factor orders. This is determined by an AMC or
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appraisal invoices and how long it takes them to
pay for their orders. After the appraiser has received
accelerated payment from the Factor for their work,
the Factor handles the collection of the order, so the
appraiser can get back to what they do so well - the
business of appraising real estate. Since the order
has been remitted to the Factor, appraisers don’t
have to worry about calling, emailing, or collecting on
the order. The Factor handles the collection process
for them.
HOW TO CHOOSE A FACTOR.
When looking for a Factoring company to handle the
collection of your orders, it is important to know the
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Factors. Recourse factoring means after the Factor
purchases the invoice, the payment for the order
may be charged back to the Appraiser if the Factor
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