How do I know if I need to factor my invoices? Any company having receivables and needing working capital needs factoring. Factoring is a financial solution that allows small to mid-sized businesses obtain working capital in amounts usually reserved for larger corporations. Factoring is especially suited for start-up businesses, high-growth companies, turnaround companies, and businesses that experience seasonal or cyclical trends. Factoring works well for under-capitalized companies with strong customer bases, or companies that have a strong future but may be going through cash flow constraints. If your business needs to increase working capital, improve its credit rating, increase production and sales, increase its purchasing power, and increase its potential for growth, then factoring may provide the solution it needs.
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How do I qualify for factoring? Factoring is a financial solution for any industry. Funding accounts receivables is based on the credit of your customers, not yours. If you have a valid invoice, and the goods or services have already been delivered (to your customer's satisfaction), and we are able to verify the information, we can give you a quick decision based on the information you provide to us.
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What are the benefits of factoring? Factoring gives your business the ability to increase its purchasing power without increasing its debt. It allows your company to buy equipment and services, pay necessary expenses such as payroll, insurance and taxes. Factoring allows you to stay focused on your core business activities rather than accounts receivable management. You can also lower your costs associated with accounts receivable collections because we will provide that service for you. Factoring allows you to attract additional business by negotiating better invoice terms. To your customers, better terms may be more attractive than lower prices. Back to Top
Can I pick and choose which invoices I would like to factor? Yes, you can factor as many, or as few, invoices as you wish. It's your decision. There are no long-term obligations. Back to Top
What will my customers think if I factor my invoices? Since Factoring is a $150 billion/year industry, you customers may already be working with factors. Their primary concern is that your company provide them with the quality goods and services they need on time and affordably. They will be comfortable knowing that your company has the working capital available to provide their needs. Back to Top
I see how factoring can help me with my customers, but what about my vendors? Factoring allows you to take advantage of possible supplier discounts. With the accelerated cash flow factoring provides, you can pay your vendors earlier or buy in larger quantities. You may be able to offset the cost of factoring through the discounts offered by your suppliers. Back to Top
Besides providing cash for my receivables, what other factoring services do you provide? In addition to providing quick cash and working capital, we also manage your Accounts Receivables for you by providing:
- Credit Work: We research your customers' credit histories and determine their credit worthiness. We also obtain credit insurance.
- Collection Services: We collect payments from your customers in a professional and timely manner.
- Accounts Receivable Reporting: We provide 24-hour online A/R Aging Reports allowing you up-to-the-minute access to your receivables. Back to Top
How does factoring differ from bank funding? Factors make funding decisions based on the credit-worthiness of your customers; a bank makes credit decisions based on your company's financial history, cash flow and collateral. Because factoring is not a loan, no liability appears on your balance sheet. Most importantly, a factor makes funding decisions in days or hours-while banks generally take weeks or even months.
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What companies benefit most from factoring? We believe every company-and each funding situation-is unique. We view every situation as an opportunity to create a flexible, dynamic "win-win" structure. Factoring works well for startups as well as high-growth businesses, including those cyclical in nature. Factoring is also well suited for under-capitalized companies with strong customers, turnarounds or companies with cash-flow problems.
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How will our customers be treated? We recognize and respect the relationship and goodwill you have created with your customers. We will treat your customers with the same degree of integrity and professionalism. Any serious issues that arise will be discussed with you and handled in an appropriate manner after discussions with you.
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What does factoring cost? Rates are based on individual and specific circumstances. Factoring rates depend on the credit-worthiness of your customers, your average invoice size, average payment cycle, factoring volume and other elements. In general, the cost of factoring is outweighed by its significant benefits: access to immediate cash, credit analysis, collection work and accounts-receivable reporting.
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What is the difference between factoring invoices "without recourse" and factoring invoices "with recourse"? When an invoice is factored without recourse, it is considered factoring on a "non-recourse" basis. In this situation, the factor takes the credit risk of the client's customers, thereby protecting the client from credit loss. When an invoice is factored with recourse, it means the client is ultimately responsible for payment, regardless of whether the client's customer pays. We offer both "non-recourse" and "recourse" factoring at rates that make sense for your business.
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When is factoring NOT a good fit for a business? Generally factoring is not a good fit in the following situations:
1. Your business operates on low margins (less than 10%).
2. Your business has significant cash reserves free of cash-flow concerns.
3. Your business serves as a sub-contactor to a less-than-established general contractor.
4. Your business involves Medicaid or Medicare-based accounts receivable.
5. Your business sells almost entirely to less than credit-worthy customers.
6. Your business has a significant amount of accounts receivable that are already overdue. Back to Top
