Fundbox Invoice Factoring
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Fundbox Quick Information:
- Fundbox Headquarters: San Francisco, CA
- Founded: 2013
- Customers: 50,000+
- Specialty: B2C invoices
About Fundbox
As Fundbox founder Eyal Shinar puts it “as a small business, you’re fighting against the world.”1 Subsequently, the company was founded as an alternative financing solution for small businesses.
Leveraging the power of accounts receivable, Fundbox advances money secured by unpaid invoices, improving your business’ cash flow. This provides the ability to pay employees, suppliers or simply repay debt. Instead of waiting net 30, 60 or even 90 days for payment, you can get paid almost immediately. As they put it, start getting paid ‘Net Now’.
Fundbox differs from a traditional factoring company by factoring receivables sent to consumers (B2C). Most ‘factors’ only service business-to-business (B2B) invoices and leave the B2C stuff for debt collectors. Today, the company improves cash flow and net working capital for over 50,000 customers.
Fundbox Invoice Factoring is Used By:
- Contractors
- Freelancers
- Vendors
- Service Providers
- Accountants
- Consultants
While some business loans and credit lines are directly funded by Fundbox, they also partner with First Electronic Bank, a Utah chartered industrial bank to use for capital funding. First Electronic Bank is FDIC insured.
In addition, Fundbox is backed by some serious investor capital. These include venture capital firms such as Khosla Ventures, Spark Capital and General Catalyst Partners. Amazon CEO Jeff Bezos and former Citigroup CEO Vikram Pandit are also investors.
Fundbox Invoice Factoring
Fundbox provides purely online factoring, another way they differ from traditional invoice factoring companies. The process is completely automated and the transactions are executed by synching with your accounting software. If you currently don’t use accounting software, they connect to your business’ bank account. We were surprised at just how simple it was to get started.
Step 1- Create a Fundbox Account
Step 2-Add your Invoices
Step 3-Select Your Accounting App
Here is some further information regarding Step 3 above. This step ‘pulls’ invoices directly from your accounting software (examples include Quickbooks, Xero, Harvest, Wave, Clio and Freshbooks). But you have to log into the account first.
While this might seem a bit intrusive or unsafe, Fundbox posts that the data is secure and none is shared with any third party. While this may give some potential customers pause, they advertise being ‘Norton [Anti-Virus] Secured’ and ‘McAfee Secure’ on their website.
They automatically pull all your sent invoices as soon as they have been issued. You select which invoices you choose to clear or factor. Some traditional factoring companies require you to factor all your invoices when you use their services (do not use an invoice factoring company that requires this-read your contract carefully).
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Fundbox Small Business Line of Credit
In addition to accounts receivable factoring, the company provides credit lines for your business, up to $100,000. While this amount is small relative to many other lenders, anything larger would require significantly more due diligence, paperwork, documentation and processing. This is exactly what Fundbox strives to avoid.
When a customer draws upon their credit line, every subsequent weekly repayment allows that amount to become available again. Here is an example:
Let’s say you wanted to draw $5000 from your credit line for up to 24 weeks. Your fees would start at $19.42 per week. This would equate to weekly repayment of $436.08, bringing the total remaining balance, including fees to $5,233.00. Keep in mind, the data used in this example comes from their pricing calculator and is based off an 8.99% rate for 24 week repayment schedule. And with Fundbox Pay, your receivables might get paid even faster (with Fundbox’s help), allowing you to reduce your financing needs.
One thing that stood out to us is their policy on prepayment. When paying back a drawn upon amount earlier than the scheduled repayment time (12 or 24 weeks), Fundbox waves all the remaining fees. You won’t find many asset based lending companies that are willing to do that for anyone other than their absolute best customers. Further, there are no origination fees, maintenance fees or subscription fees.
Should I Start Factoring Receivables with Fundbox?
Fundbox reviews are generally quite pleasant. If you have unpaid invoices that are business to consumer (B2C) then Fundbox is the way to go. It will be hard to find a faster, easier small business funding option, with limited interaction with the financier. And as for a small business line of credit, you’re unlikely to find an easier way to land the loan with any traditional bank.
We like the fact that the company does not inform your customers of the factoring relationship. There is no Notice of Assignment received by your customers. While many businesses don’t mind their customers knowing they are factoring invoices, some businesses are afraid it sends the wrong signal about their financial stability, warranted or not.
The one thing you will need to keep a close eye on is your customers. The fees are reasonable, but the longer the invoices remain outstanding, the more the fees compound. This could end up taking out a big chunk from your invoice.
Finally, the downside to being fully automated is the potential for spotty customer service. If there I a problem and you need to speak to a customer service rep, that may prove more difficult.