Factoring or JOOR Pay: Which is Right for You?

February 15, 2023

Running a fashion business takes a complex suite of skills. The fashion aspect demands creativity and innovative high-level techniques, while the business side requires organization, attention to detail, and a strong sense of executive function. Especially when it comes to cash flow.

Maintaining cash flow can be tricky in a business that has to plan future seasons while creating the current season and selling previous seasons. With materials, labor, warehousing, and shipping to manage along with regular operating expenses and overhead, cash flow can occasionally become an issue that some companies turn to factoring to solve.

How Factoring Works

Factoring is the purchase of an invoice from another business. A finance company, for instance, might purchase an invoice at a discount, then profit by collecting the full amount of the debt. Factors will front up to 85% of the purchase price of the invoice, which gives the seller immediate cash flow; they make their own profit when the invoice is paid in full.

While the need for cash flow can sometimes be urgent, factoring might not be the best choice in every circumstance. Some factors approve or underwrite individual businesses and all their invoices, but many must approve each specific invoice, making the process much more cumbersome and administratively complicated for the seller. In addition, most factors are licensed in a single country or jurisdiction, limiting their utility in the international and connected world of fashion. Most importantly, some factors accept no liability for collection losses, meaning if they cannot collect the full amount of the invoice the seller has to take responsibility for any loss of funds.

JOOR Pay: A Better Way

JOOR Pay offers fashion wholesalers several advantages over traditional factors. First, JOOR Pay underwrites individual buyers, rather than only particular invoices. Once approved, those businesses can easily leverage their JOOR Pay account with any brand on the JOOR platform, drastically reducing the administrative burden. Since it is fully integrated into sellers’ purchase orders, JOOR Pay automatically confirms any transactions and updates both buyer and seller immediately. 

Experienced with the global nature of the fashion industry, JOOR Pay can seamlessly accept payments from all around the world, and convert funds into 135 currencies. At no point in the process does JOOR take ownership of the goods for sale: when the purchase is confirmed, JOOR simply fronts the full amount of the purchase to the seller immediately, then collects from the buyer weeks or months down the road. Should the buyer default, the seller has no liability. JOOR takes on the responsibility for any loss.

JOOR Pay can underwrite businesses of all sizes, from small shops to multi-million-dollar global enterprises. Find out how JOOR Pay can improve your cash flow and benefit your fashion business. 

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