Invoice Factoring for Small Businesses
Making sense of invoice factoring and how Fundbox is different.
How does invoice factoring work?
Every invoice factoring service operates a little differently. You may have heard of invoice factoring or invoice discounting, but with both you access funds from an unpaid invoice. With invoice factoring, you sell your unpaid invoices to the factoring company and they collect payment directly from your customers. You also likely will receive 60-95% of the invoice value, not the entire amount.
How is Fundbox different than invoice factoring?
The main difference between Fundbox and invoice factoring is in the interaction with your customers. With Fundbox you continue to work with your customers directly. You also get the full value of the invoice deposited into your bank account right away. Use Fundbox when you need it most and continue to run your business and maintain client relationships as you always have.
What is the advantage of Fundbox over other alternative business funding options?
For starters, Fundbox is very easy to use. You can register in seconds without any paperwork or personal credit check to get started. Connect your accounting software and we'll give you a credit decision in hours. If you're approved and advance an invoice, funds arrive in your bank account as soon as the next business day. Read more about how Fundbox works.
Introduction to Invoice Factoring
If you own a small business and have slow-paying customers or occasionally limited cash flow, you’ve probably considered or heard about invoice factoring. In this guide, we’ll explain everything you need to know about invoice factoring, from how it works to how to qualify, how much it costs, as well as factoring companies and alternatives to consider for your business financing.
Small business can use Invoice Factoring as an alternative to loans
Small businesses can use factoring as an alternative to loans. Instead of working with banks or lenders, small business owners can work with a third party called a factoring company (also simply known as a “factor”) to access funds by “factoring” outstanding invoices. Invoice factoring is a financing plan specifically designed for businesses that issue invoices with net terms, usually between 30 to 90 days. With invoice factoring, businesses can sell their unpaid invoices to get access to extra funding quickly.
Don't sell your invoices
Instead of offering a term loan, which is a lump sum, factors essentially “buy” invoices from your business. When you decide to “factor” an invoice, you are selling the unpaid invoice to the factoring company and they send you a fraction of the total invoice value. This means you receive a percentage of the invoice amount owed and the factoring company takes the rest as their fee for advancing and collecting the funds. The factor then collects on the unpaid invoices you sold them. The factor only sends you a fraction of the invoice value up front because they are taking on risk by factoring your invoices—they still must collect from your customer.
After the completion of this invoice “sale,” the responsibility for collecting the payment from your customer shifts from you, to the factor. The factoring company will contact the client who owes the invoice, and that client will need to direct payments and questions to the factor instead of you. This is an important feature of invoice factoring that you should consider, since it necessarily affects your relationship with your customer.
Why Invoice Factoring Matters
In short, invoice factoring matters because it is a financial tool that helps businesses get paid faster for work they have already delivered.
If you find that cash flow gaps due to slow customer payments are restricting the growth or operation of your business, you might think that the solution would be to simply ask your clients to pay their invoices sooner. If only it were that simple.
Invoice Factoring Lets You Offer Better Payment Terms To Win More Business
More often than not, most small- to medium-sized businesses (SMBs) are not in the position to offer shorter term invoices for a number of reasons. For example, some customers are used to those longer payment terms (aka "trade terms"), and taking away those terms may cause customers to take their business elsewhere. In some cases, shorter terms aren’t an option for your clients because they have expenses of their own and are simply unable to pay earlier. In some industries, offering a longer payback period is part of a larger negotiation strategy for getting the best deals. These are just a few of the reasons why many small businesses holding outstanding invoices turn to invoice factoring as a strategy for reducing their cash flow gap.
Invoice Factoring Popularity Among Business Owners
Invoice factoring has become popular among SMBs in recent years, since they are frequently in need of faster cash flow, not only to sustain their operations, but grow as well. If your business is still young, it might not be feasible to wait around for payments to come through before expanding operations to take advantage of new market opportunities. It’s also typical for smaller, earlier-stage companies to encounter unexpected expenses and events that drive costs over budget.
Invoice factoring can give you a chance to save valuable time and jump on unexpected opportunities that require cash in hand, fast.
How Invoice Factoring Is Being Used To Improve Cash Flow
Here are some examples of how business owners can make use of improved cash flow from invoice factoring
- “Making Payroll in Slower Times”
- “Staffing and Hiring New Employees”
- “Investing in Marketing & Advertising”
- “Paying Rent and Reoccurring Bills”
- “Collecting Funds Faster For Unpaid Invoices”
- “Buying More Inventory To Increase Margin”
- “Buying Materials For Projects”
- “Buying New Equipment”
Historically, invoice factoring as a form of speeding up cash flow has existed for hundreds of years.
Quick history of Invoice Factoring for Small Businesses
Examples of factoring have been found as early as the ancient Roman Empire. In the early 1300s & 1400s, traders lent money against the delivery of trade goods. Merchants would trade this contract instead of the actual goods. Factoring has definitely been a part of doing business throughout the history of the United States. In the 1600s & 1700s when English colonists traveled across the sea to America, London would advance funds to purchase goods. While in the 1910s, the booming garment industry relied on invoice factoring to purchase raw materials to manufacture textiles.
Today, Internet access and technological developments have made factoring increasingly easy and accessible for small businesses. A recent development that came out of invoice factoring is invoice financing, also known as accounts receivable financing, which will be described in more detail below. As you begin to learn about invoicing factoring, you will see that it’s often compared to invoice financing, as they are both similar ways to get funding based on outstanding invoices. Many businesses have made invoice financing and factoring common practice.
Industries where invoice factoring and financing are common include:
- Courier services
- Trade Services (like contractors, handyman, remodeling, landscaping, cleaning and more)
- Professional Services (like marketing agencies, creative designers, accountants, and more)
Popular among small businesses, invoice factoring and financing are options worth considering for all types of businesses, regardless of industry. These type of financing plans work well for some growing businesses because they help make you unlock the funds you currently have sitting in unpaid, high-value invoices. If your business is struggling, this type of financing can also serve as a crucial lifeline by lowering your days sales outstanding (DSO) metrics, meaning you get your payments faster.
In this guide, you will gain a clear understanding of how invoice factoring and invoice financing works, so that you can evaluate and choose an appropriate identify which financing plan and company works best for your business.
How Invoice Factoring Works
Although every third party factoring company will have their own set of terms and conditions built into their invoice factoring plans, the basic structure of how all invoice factoring works will be approximately the same. Here are the basic steps you can expect.
Step 1: Finding a Factor
The first step of invoicing factoring begins when you send an invoice to your customer, asking them to pay for the goods or services you provided. Your bill would have a deadline for payment as well as instructions on how they can pay you back. You can find a factor and sell your invoice to them as soon as you’ve sent the invoice and your customer has agreed to pay.
Keep in mind that with invoicing factoring, you can only sell invoices that are payable within 90 days. If the payment term is any longer that that, your invoice may not be eligible for invoice factoring. When choosing whether to factor invoices, consider that the entire invoice factoring process can easily take a week, between the time you begin factoring to when you get your funds from the factor.
When choosing a factor, you should also think about the amount and frequency of invoices you want to sell. Many invoice factoring agreements require a regular, recurring arrangement. In these arrangements, you might have to agree to factor a certain amount of your invoices, to factor on a monthly or weekly basis, or some other schedule or minimum invoice value. If you do not stick to these terms, you could get hit with extra fees.
In addition to conventional factoring arrangements, there are so-called “spot factoring” arrangements (which we will discuss more in the comparison section of this guide). In short, these are transactions where a factoring company buys a single invoice from you, instead of a bunch at once, or many invoices on a predetermined schedule.
Spot factoring has some clear benefits, due to the greater flexibility you get when determining which invoices to sell. However, it’s harder to find this kind of arrangement. It’s also more expensive, with generally higher fees, and a high minimum amount. In fact, most spot factoring companies require that the invoice be several thousand dollars. The reason for this is that it’s more risky for the factor, since it’s much harder to predict the likelihood that individual invoices will eventually be paid. Since the risk is greater, the factor requires a larger reward to factoring your invoice.
Step 2: The Factor Agreement
Once you have selected a factoring company that fits your needs and budget, they will review your business credit and transaction history, as well as the invoices you are factoring. They may ask you for a series of personal documents, as well as perform a personal credit check on you or your customers. The goal of this evaluation is to discover the reliability of your customers and the likelihood that they will pay the invoices on time.
After this review, if you are approved, you will sign a factoring agreement and begin the factoring process. The factoring agreement should outline any fees, details of the payment plan, and the initial maximum dollar amount that will be given to you. That amount would be the maximum factored amount outstanding at any time. It is important to read all terms and documents carefully during this part of the process. You might want to consult a lawyer specializing in small business finances who is familiar with factoring to go through the agreement paperwork and make sure you understand various potential scenarios, such as what happens if you need to delay a payment.
Step 3: Assigning the Factor
Once the agreement has been signed, the factor will give you an advancement called the advance rate. Normally, this rate is a percentage of your invoice value. The amount you receive is usually around 80% of the total invoice value, and would be outlined in advance in your agreement with the factor. The rate you get is generally determined based on your industry, transaction history, and stability of your business.
Because invoice factoring involves re-assigning the receiver of your client’s bill, the company offering invoice factoring may send out a “notice of assignment” to your affected clients at this stage. The notice would inform them of your invoice factoring plan, and provide them detailed instructions on how to send future payments from invoices issued from you.
Step 4: Collection and Payment
As soon as your invoice’s deadline has passed and your client has paid the factor, the factoring company will send you any remaining balances, known as the reverse amount. To collect their own payment for their services, the factoring company will also deduct their service fee, also called a rebate, from the remittance. This fee is usually a percentage that you negotiate when drafting your factoring agreement, and this percentage is usually based on the total original invoice amount and the invoice due date.
How To Qualify For Invoice Factoring
Before you begin invoice factoring for your company, you’ll need to complete an application as required by the factoring company of your choice to find out if your business qualifies.
There are many components factoring companies look at within your company and invoices when determining the eligibility of your business. We’ll discuss all of the usual criteria here.
The number one determining factor that affects a company's eligibility in the eyes of a factor, is their customers themselves. Because factoring companies will be potentially taking on the financial risk and consequences of any unpaid invoices, factors want as much information as they can get to make a bet on whether your outstanding invoices will eventually be paid. There is always a possibility that some customers may not be able to pay their invoices, due to bankruptcy or poor planning.
Like any lender, factors do everything they can to avoid the risk of losing their capital. By asking you to provide information and answer financial questions about your invoices and customers, factoring companies are doing their due diligence to predict the potential loss they may face by agreeing to finance you.
Are your customers reliable?
Here are examples of the questions that factoring companies may ask you regarding the credibility and reliability of your customers during their evaluation:
- Do your customers normally pay their invoices on time?
- What is the reputation of your clients? Examples of companies that have historically paid their bills on time include government agencies and large commercial corporations, or established companies that have been in business for many years
- Do your clients have good credit scores?
- Do you clients have any debt or legal issues that may hinder them from paying their invoices in the future?
- What industry are they in?
business’ credit score and annual revenue does influence your eligibility to receive invoice factoring, it is more important for you to emphasize to factoring companies that your clients are reliable, pay their bills on time, and bringing in significant revenue. As long as any of the questions above are addressed with confidence, you should be able to get approved for invoice financing.
Now that you have a taste of the level of background checks involved in invoice factoring, it is easy to see how this application process for invoice factoring can take over a week from start to finish. For that reason and many more as discussed later in this article, many businesses need a faster form of financing and turn to alternative lenders and credit solutions, instead of working with factors to sell their invoices. With alternative credit solutions like Fundbox, the application process only takes minutes, involves no paperwork at all, and can all be done online. The entire process can take as quickly as a couple hours, meaning, if approved, you can draw funds the same day, and receive funds as soon as the next business day.
How Much Does Invoice Factoring Cost?
Once a factoring company agrees to work with you, you will need to pay them for their invoice services in the form of factoring fees. That’s why, when you sell your invoices to a factor, you only get a percentage of the full invoice value. A typical factor advancement is around 80% of the invoice value, but this will vary depending on your agreement and the factor. You should always learn and negotiate the terms of these fees when you sign a factoring agreement. The fees are generally composed of two key components: the Discount Rate and the Factoring Period.
The transaction fee or the primary cost of doing business with a factoring company is known as the discount rate, or the factor rate. Depending on the factor and the factoring period, it could range from two to 10 percent of the invoice. If you’re also dealing with a large amount of invoices within a given time frame, this rate could be lower. Always ask your factoring company about how their discount rate is determined, and what you can do to get the best rate.
As an example, let’s say that you have a $100,000 outstanding invoices due in 30 days, and you choose to factor it at a discount rate of 5%. You would receive $95,000 as your first advancement because the factor company has kept $5000 as their fee.
The Factoring Period is the amount of time that a factoring company allows your customers to keep their invoices open. This information is relevant for you because it will affect the amount of fees you ultimately pay. Factors charge discount rates at regular intervals (typically weekly or monthly), so the factoring period, the length of time your customer takes to pay your invoice, will determine your final cost.
It’s important for you to work with the factor to set a realistic factoring period that works for you and your clients, because even if your clients do not pay back the invoice on time, in a “recourse factoring” agreement, the factor could begin collections from you to withdraw their fees. Consider the length of time it will take for your customer to pay your invoice when determining your costs.
For more about how “recourse” vs “non-recourse” factoring, see below, on Comparing Factoring Companies.
In addition to the discount rate and factoring period above, factoring companies may charge additional fees, all of which should be explained in your factoring agreement. These fees might include any but not limited to the following (or more):
- Origination or Account Setup Fees - These are one-time costs associated with setting up new accounts when starting a relationship with a factoring company.
- Lockbox or Service Fee - For your account, a factor might keep a lockbox or a separate account to collect invoice payments. For doing so, hey might charge a fee from $50 to $500 a month.
- Incremental Fee - This is a fee applied to factoring agreements where the discount rate is a flat fee. This fee will increase the total discount by a small percentage, usually no more than 1%, increase based on how long it takes the customer to pay the invoice.
- Unused Line Fee - This is a fee applied to the average unused portion of the overall factor line per month. If you are subject to an “unused line fee” and if you do not use the full amount stipulated in your factoring agreement in a given month, you may be charged a small fee that will be deducted from your account. This is not typical, but look out for it.
- Monthly Minimum Volume Fee - If your invoices do not generate a certain amount of minimum fees in a month, for example you billed less than usual in a month, you may be charged a monthly minimum volume fee.
- Renewal Fee - This is an fee charged annually, in the case that you want to keep the factoring line open for another year.
- Overdue or Collection Fee - If a customer pays late and requires some sort of action from the factor to collect payments, the factoring company may pass on the cost of this action to you. This usually is a flat fee and can cost up to a few thousand dollars per missed payment.
- Credit Check Fees - A factoring company that performs credit checks on you or your customers may pass on the costs of these tests to you.
- Non-recourse Factoring Fee - this is a fee applied in factoring agreements with a non-recourse clause. A non-recourse clause basically states that you won't be held liable if your customer fails the pay the invoice. Many factoring companies charge this fee as compensation for taking on this responsibility
- ACH Transaction Fee - This is a fee charged for any transactions between you and the factor that involves ACH transfers.
- Wire Fee - This is a fee charged for any transactions between you and the factor that involves wire transfers
Comparing Factoring Companies
As you begin to shop for factoring companies and compare their rates, we suggest that you request each company provide information about all fees that they require. You should also check that all fees are outlined clearly in the contract, so there are no surprises. If finances are not your main area of expertise, it’s often a good idea to consult an accountant or a lawyer for a second look.
Since there are hundreds of factoring companies available today, you can shop around and compare a handful of the most credible ones to find out which company best fits your business needs. Here is a list of things to consider before deciding which factoring company to choose:
Reputation of the Factor
A quick Internet search can reveal reviews and information about nearly every factoring company. Take note of the age and reputation of the factoring company. Reading online reviews is a good way to find out how satisfied other business owners are with their factoring experiences, and how you’ll probably be treated by the factor, should you choose to work with them.
On the customer support side, you’ll probably want to ask the company about its customer support, since your clients will be directly interacting with them. Find out how they will interact with your clients and whether the customer experience will be acceptable for your valuable clients.
Length of Factoring Experience
You should also look into how long the entire factoring experience takes, from applying to receiving funding. In general, invoice factoring takes between 2 to 7 days, and funded approximately 1 to 3 business days afterwards. It can often take longer than this.
If you’re looking for a way to get even faster access to business funds, you may want to consider a wider range of sources alongside invoice factoring. Fundbox is often a good choice for business owners who want funds quickly, because the entire application process only takes minutes. WIth Fundbox, you can sign up online and connect your accounting software or business bank account, and expect to receive a credit decision within hours. There’s no paperwork to get started, and no minimum personal credit score required to be considered, making applying to Fundbox a refreshingly simple process for small business owners.
Recourse vs. Non-Recourse Factoring
When choosing a factor to work with, you should compare recourse vs. non-recourse factoring.This refers to what happens in scenarios where your clients do not pay your invoices on time.
Recourse factoring is the most common type of factoring in the U.S. In recourse factoring, the factoring company is given the right to collect payment from you if your clients do not pay your invoice on time. This type of factoring can lead to additional fees for you, based on the amount of time it takes for your client to finally pay what they owe.
As you can imagine, this type of factoring is risky because it can potentially create a whole new set of cash flow problems and land you in a debt spiral, where you are unable to settle debts owed to the factoring company. As you might imagine, it’s very expensive and difficult to get out of this situation once you’re in it.
Non-recourse factoring is more attractive for most business owners, because the factoring company takes on more of the risk and won’t penalize you if your client does not pay the invoice on time. Even if a factoring firm states they offer “non-recourse” factoring, you should double check the contract to see if they outline any criteria or “loopholes” where your invoice changes into recourse factoring.
Some factors may do a combination of the two types, and offer what are called “partial-recourse” agreements. Regardless of what the factors say in their marketing materials,, it is always a good idea to read the contract carefully and ask questions to make sure you understand all the agreements associated with the event in which your client pay late or not at all.
Spot Factoring or Contract Factoring
The next consideration is finding out if the factoring company allows spot factoring or contract factoring.
With “spot” factoring, a company can sell and assign a single, individual invoice to a factor. This is good for companies, but usually bad for factors who have already put in so much work and time to work with you through the application process. A single invoice also means that it may potentially not be a lot of money and would make the factor consider you a lower value customer. If that’s the case, be prepared for higher fees, and stricter agreement terms.
“Contract” factoring means that rather than picking single invoices, factoring companies take on invoices based on value, and require a long term contract. For example, they might require a minimum monthly volume, usually over $10K, or they might require that you direct all invoices to them for the contract period.
Contract factoring is common, but less beneficial for small businesses because they have a variety of clients who pay using different terms or may have changes in financing. There’s not a lot of flexibility in contract factoring. If you need more flexibility, you should compare some alternative financing solutions like Fundbox, which lets you choose which individual invoices to advance and when to advance them.
Finally, the last big consideration that might affect your decision is industry familiarity. You will probably want to choose a factor based on the industry it specializes in financing. For example, if you own a construction company, you will want to find a factoring company that is familiar with dealing with construction clients and trusted by other companies in your industry.
Trusted by over 70,000 small businesses across the U.S., Fundbox is an example of a company that can help across multiple industries. We have a reputation of excellent customer support and satisfaction, with a TrustScore of 9.7 out of 10 and an overall rating of “Excellent” on TrustPilot, and an A+ rating with the Better Business Bureau.
Invoice Financing: A Better Alternative?
As we’ve discussed already in this article, if you are considering invoice factoring, you might also be interested in invoice financing. Similar to invoice factoring, invoice financing is also a solution for fixing cash flow issues that allows small business owners to get advances on unpaid invoices. Both invoice factoring and invoice financing involve a third party company to help businesses turn unpaid invoices into cash. In this section, we’ll compare the two to help inform your decision.
Invoice financing and invoice factoring have many similarities.However, there are few key differences that are relevant to your decision of whether invoice factoring or financing is a better fit for you.
Credit Check vs. No Credit Check
Since invoice factoring companies, like any other lenders, take on the task of collecting invoices and sending your advancement without a 100% guarantee of receiving the funding back, factors consider their risks carefully. Applying for invoice factoring will require you to agree to a credit check on your customers. If your customers fail these credit checks, you may not be eligible for financing.
With invoice financing, a credit check isn't necessarily the main arbiter of creditworthiness, because fintech invoice financing companies like Fundbox use sophisticated technology that helps us extend capital to businesses by taking into account many factors. The technology was built to evaluate small businesses based on their business information.
For example, with Fundbox, you could be approved for invoice financing in just hours. During the assessment, we determine whether we are able to approve you for credit and, if so, what your credit limit would be. Fundbox assess the health of your business based on your accounting software or business bank account data. Businesses who use our service are asked to link their accounting software (Clio, Ebility, FreshBooks, Harvest, InvoiceASAP, Jobber, Kashoo, PayPal, QuickBooks Desktop, QuickBooks Online, Xero, and Zoho) or bank account, not personal credit scores, when signing up for an account.
By looking at your business data from these sources, Fundbox looks at your invoice and payment history and other indicators of your business performance, and determines your eligibility for credit in hours. If you’re approved, you can draw funds and expect them to arrive as soon as one business day.
Reassigning Invoices vs. Control of Invoices
When you use invoice factoring, you are essentially selling or re-assigning invoices to a third party company: the factor. The factoring company takes over the communications with your clients about their invoice, and the factor is the one processing the payment.
You might see this as either a benefit or a drawback, depending on your relationship with your customers. Handing over such complete control over credit and collections to a third party service such as a factor could be a positive thing enabling you to focus time and resources on other areas of your business.
However, businesses that highly value customer relationships and experience may balk at giving that control to a factor, since it can cause some problems. For example:
- Clients might get confused when the factor begins contacting them
- You may find it embarrassing to reveal to clients that you have a business contract with a factoring company, implying that you have cash flow issues
- You may not want to lose control of your customer experience, since the factor can contact your clients without consulting you or use tactics you don’t like
With invoice financing, instead of having your clients direct their invoice payments to the factor, your clients will continue to direct their payments to you, just as they would before you initiated invoice financing. This is an important point because with invoice financing, you remain in control of the sales ledger, collections, and invoice processing. At Fundbox, we don't want to interfere with your customer relationships, so we communicate directly with you.
Full Funding vs. Partial Funding
With invoice factoring, it is common practice for businesses to receive only a portion of the full value of the invoice. After the client has paid the invoice in full, minus the fees, the factor then sends the remaining advancement back to you. Some businesses might need their funds soon and be willing to sacrifice part of the invoice value, but losing out on a percentage of high value invoices can really hurt in the long run.
With invoice financing, you get 100% of the invoice value. You just have to be willing to pay the fees over time. In the case of Fundbox, you can receive funds as soon as the next business day. Fundbox offers convenient 12-week or 24-week terms; you choose what works better for you. Fundbox provides credit limits up to $100,000.
Amount of time for funding
While invoice financing and invoice factoring are both known to be much faster than traditional bank loans, invoice financing is usually faster than invoice factoring.
With credit checks and application processes, invoice factoring can potentially take a week or more to fund your invoices. With invoice financing, the online applications and tools can take closer to 2 or 3 days for you to receive your payment. New fintech alternatives like Fundbox help you move extremely fast: Fundbox lets you sign up in seconds, get a credit decision in hours, and if approved, get the funds in your business bank account as soon as the next business day.
Invoice Factoring for Small Businesses
Invoice Factoring for small businesses is a great way to get paid on slow paying clients. Depending on how fast repayment comes in, it'll be easy to repay off money borrowed. With this extra influx of capital, one can then meet the demands of payroll, extra expenses, etc. It's possible this would be the last time this would need to be done too.
Factoring, Financing… What’s the best solution for your business?
For many small business owners, factoring is an attractive choice because the factoring company takes over the responsibilities of collections, freeing up more time for you to run your business. If you are experiencing collections problems, where your clients aren’t paying you on time, and you don’t know what else to do, then factoring could be a good solution since it puts that responsibility on a third party experienced in collections.
However, if you simply need to get paid faster but don’t want to lose control over your customer relationships and customer experience, invoice financing might be a better alternative for you and your clients. In today’s competitive business environment, customer experience counts for more than ever. Now there are services like Fundbox which make invoice financing possible, more and more businesses are choosing invoice financing over invoice factoring.
Another reason businesses choose invoice financing over factoring is that financing tends to be more transparent in terms of fees and repayment policies. This transparency means fewer opportunities for surprises, and more accurate predictions of future expenses. Invoicing financing is a valuable tool for you, if you are running a growing company and are looking for more control over your cash flow.
The Fundbox application and repayment processes are examples of transparency. With Fundbox, there are no subscription, prepayment, or inactivity fees, and you only pay when you draw. You can even use our rate calculator to get an estimate of your financing plan. Depending on the value of your invoices, Fundbox fees start at 4.66% of the drawn funds. There is no early payment penalty: you actually pay fewer fees when you pay off your entire balance early.