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 Types of Financing
Accounts Receivable
What is Factoring?
Converting Invoices into Cash
Factoring is the purchase of an asset (your accounts receivable or invoices) from a business at a discount. In return, cash that is usually tied up for a 30 to 90 day waiting period becomes immediately available. This additional cash enables you to take advantage of growth opportunities, debt reduction, or payment of daily or monthly operating expenses. Factoring is a fast, easy and flexible way to improve your cash flow and generate working capital for your company.
Factoring is not new - it has been used in the United States as far back as the 18th century. Today - factoring is approaching $200 billion annually and is used by any type of business that has accounts receivable available to finance.
Factoring is not a loan - it is simply the purchase of an asset (your accounts receivable or invoices) at a discount by a financial institution called a factor. A traditional bank loan uses all of your company assets as collateral and usually requires personal guarantees. Factoring relies on the credit-worthiness of your customers, not your balance sheet or history.
Unlike a traditional loan, factoring does not add debt to
your balance sheet, and there are no loans to repay and no
monthly payments of principal and interest. By selling your
accounts receivable to a factor rather than borrowing from
a bank, you simply convert one asset (accounts receivable)
into another asset (cash). You can factor accounts receivable
to improve your cash flow or help to accelerate your growth.
There are no lengthy applications or loan committees. Factoring
can be short-term or part of an ongoing financing program.
New companies can especially benefit from factoring, since
there is no requirement for a long-term credit history.
Why our Clients Use Factoring As a Powerful Financial Solution
Our customers have discovered that factoring is a great resource for streamlining their cash flow. The process is very easy and assures that cash is always available if and when it is needed. Factoring with us is a powerful financial solution because it allows our clients to:
- Obtain a source of cash flow to grow their business
- Utilize a secure and professional credit checking and collection payment system that reduces bad debt loss
- Use a flexible funding program that increases as sales are increased
- Receive working capital to pay suppliers quickly, take cash discounts, pay operating expenses and increase credit limits with suppliers
- Have a managed accounts receivable system that includes invoice processing, invoice posting and invoice reporting so that time is freed up time for other revenue-generating activities such as sales and marketing
- Access cash to pay bills, pay employees, and invest in the growth of their business creating greater profits
Factoring is an extremely powerful cash management tool to the business world.
This is because the most important aspect of the transaction
is not the credit-worthiness of you or your company; it's
the credit worthiness of your customers. So, factoring is
a fast, easy and reliable financial service that allows you
to access cash based on the financial soundness of your customers.
How Do I Qualify For Factoring
You can qualify for factoring services as long as:
- You deliver a quality product or service to another business
- You sell to credit worthy customers
- Your accounts receivable are unencumbered
We can provide factoring services to most types of businesses, Including:
- Manufacturers
- Distributors
- Wholesalers
- Service Providers
While our clients represent many different industries, they all begin using accounts receivable financing services for the same reason. They find themselves in need of cash or growing faster than current cash flow can support.
Is your business…
- A young company with creditworthy customers-but lacking the financial history required for traditional lending?
- Doing well, but looking to take advantage of new sales and profit opportunities requiring increases in cash flow?
- Experiencing operating losses (perhaps already filed for bankruptcy)?
- Struggling with poor credit and/or tax related problems?
- Growing rapidly, but with too much money tied up in accounts receivable and thus cannot fill orders, provide service or pay operating expenses?
- Positioned to increase current volume but reluctant to take on additional debt, increase overhead or add an equity partner?
If you answered "Yes"" to any of these questions, factoring may be your solution.
See how factoring can put cash into your business today!
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