Factoring Company Guide
First Step: Filling Out the Application
Begin enhancing your business’s cash flow with our simple and transparent application process. Fill in essential information about your company and its clientele. This step is designed to efficiently assess your financial needs.
You will need to submit relevant financial documents. These help us gauge the creditworthiness of your customers, giving us a full perspective on their financial status.
This phase also involves discussing the details of your financial requirements. Determine the volume of invoices you wish to factor and your preferred rates. These factors vary based on industry specifics and customer credit profiles.
Remember, the amount of your factoring influences your rates. Larger invoice volumes typically result in more favorable terms for your business.
Using your application, we evaluate whether factoring fits your business's financial strategy. Once approved, we enter into negotiations, where the amount you wish to factor plays a significant role in shaping the terms of the agreement.
Throughout the negotiation, we maintain clarity regarding all costs. Upon agreement, we expedite the funding process, ensuring a smooth and quick transition to your cash advance.
Factoring Company Benefits
Advantages of Factoring: Strategic Financial Solutions for Your Business
- Shift your focus from cash flow concerns to strategic business expansion.
- Eliminate the burden of loan repayments with rapid access to cash.
- Maintain autonomy in your business decisions and operations.
- Reduce administrative costs associated with chasing payments.
- Strategically manage cash flow by selecting invoices for sale.
- Stay financially agile, even with clients who pay late.
- Empower your production and sales teams with consistent cash flow.
- Leverage expert services in payment collections and credit checks.
- Ensure reliable payroll management for a motivated workforce.
- Always have sufficient funds to meet your payroll tax obligations.
- Capitalize on bulk purchase discounts through immediate cash availability.
- Strengthen your negotiating power for early payments or bulk orders.
- Positively impact your credit score with on-time bill payments.
- Access the capital you need for business expansion and growth.
- Invest in effective marketing strategies with available funds.
- Notice an improvement in your financial statements' health.
- Get comprehensive reports for a clear view of your accounts receivable.
Is Factoring For You
Recognizing the Importance of Factoring
"When you don't collect the money, a sale remains unfinished."
Have you ever felt like you're taking on the role of a part-time banker for your customers?
Take a moment to examine your accounts receivable aging schedule and count how many accounts are overdue by more than 30 days. Congratulations, you're essentially providing credit to those customers. By not receiving timely payment for your products or services, you're essentially offering interest-free financing to your customers. This may not align with your original business intentions, does it?
Let's consider this:
If your customers were to approach a bank and borrow the same amount of money, they would undoubtedly expect to pay a significant amount of interest for that privilege.
Moreover:
Not only are you missing out on earning any interest on that money, but more importantly, you're also losing the opportunity to utilize that capital while waiting for your customers to settle their debts. What is the cost of not having this money readily available? Essentially, your customers are essentially requesting you to finance their business by granting them extended payment terms, often exceeding 30 days.
However, have you ever taken a moment to contemplate the expenses incurred due to "missed opportunities" when your funds are tied up in accounts receivable? It's worth reflecting on the impact this has on your business and exploring how factoring can help alleviate these challenges.
Factoring History
Factoring: Boosting Business Potential and Financial Success
Welcome to the world of factoring, where businesses uncover the secret to unlocking their full potential and achieving financial success. Whether you're a seasoned entrepreneur, a startup founder, or a business professional seeking new financing options, factoring is the tool that can propel your business forward.
Surprisingly, factoring often remains hidden in the shadows, with many business owners unaware of its incredible benefits. Yet, it holds the key to driving growth, ensuring cash flow stability, and opening doors to new opportunities.
So, what exactly is factoring? At its core, factoring involves selling your outstanding invoices at a discounted rate to a specialized financing company. In today's competitive landscape, offering credit terms to customers is a necessity for business growth. However, waiting for payments can strain cash flow, hampering your ability to invest, expand, and thrive.
Factoring has a rich and storied history that spans centuries. It originated from the realization that businesses shouldn't be held hostage by unpaid invoices. Over time, factoring evolved and adapted to meet the unique financial needs of businesses in different eras, becoming a reliable tool in the modern business landscape.
Today, factoring is a catalyst for unleashing business potential. By partnering with a reputable factor, businesses gain immediate access to the funds tied up in their invoices. This influx of cash empowers entrepreneurs to cover operating expenses, seize growth opportunities, and invest in crucial areas like marketing, technology, and talent acquisition.
Factoring knows no bounds when it comes to industries or business sizes. Whether you're a manufacturer, a service provider, or a B2B company, factoring can be customized to fit your specific needs. It offers flexibility, scalability, and the ability to adapt as your business evolves.
Beyond providing quick cash flow, factors bring additional expertise to the table. They evaluate the creditworthiness of your customers, manage collections, and take on the risk of non-payment. This frees up your time and resources to focus on core business activities, knowing that your factor is diligently working to secure payments on your behalf.
Factoring liberates businesses from the shackles of traditional financing options. It provides a fast, efficient, and accessible alternative that supports growth, innovation, and long-term success. With factoring, you can break through financial barriers, expand your operations, and seize new opportunities in your industry.
Join the ranks of businesses that have harnessed the power of factoring and experience the transformation it can bring. Embrace a future of financial stability, increased liquidity, and enhanced growth prospects. Factoring is the key that unlocks the doors to your business's ultimate potential.
Credit Risk
Quick Continuous Cash: Expert Credit Risk Assessment Without Burning a Hole in Your Pocket!
Hey there! Evaluating credit risk is our bread and butter, and honestly, we're darn good at it. Bet you can't do it as well as we can, and guess what? We don't charge extra for it!
We're like your in-house credit department, but without the overhead costs. We handle the nitty-gritty of credit assessments for your new and existing customers, giving you an edge you won't find elsewhere.
Picture this: Your sales guy is chasing a big fish, so focused on closing the deal that he misses the red flags. You land the sale, but what if you don't get paid? With us, you don't have to worry about that. We've got your back in spotting those risky customers.
And hey, if you're eyeing a customer with iffy credit, you still call the shots. But remember, we might just have to say, "We told you so!"
Even if we pass on buying certain invoices, you're still in the driver's seat. You make the credit decisions, but with our input, they're smarter, sharper, and way more informed.
We do the heavy lifting in researching new clients and keep a close eye on your existing ones. Most businesses drop the ball here, but not us. We're always on alert, so you don't get blindsided by a bad credit situation.
On top of that, we dish out detailed reports on your entire accounts receivable. Imagine having all that intel at your fingertips. It's like having superpowers in financial management!
With 70+ years in this game, we're the pros you want on your team. Let's turn our expertise into your financial victory.
How To Change Factoring Companies
Changing Your Invoice Factoring Service Provider
Need-to-know info about switching invoice factoring firms.
Are you considering a different invoice factoring firm?
Are you dissatisfied with your current one?
Planning on ditching your current factoring firm?
What should I know before I switch factoring companies?
Here's a guide answering all these queries and more:
Understanding UCC and its role in switching factoring firms:
Usually, factoring companies file a general Uniform Commercial Code (UCC) to secure their claim over the invoices they've funded.
The UCC helps factoring companies, banks, and lenders know who's lent money on which assets. As invoices change daily, factoring companies need to file a 'blanket' UCC that secures all your receivables, even if you're only factoring a part of your sales. This 'blanket' UCC acts as a signal to other lenders, showing a Security Agreement exists between you and the factoring company.
Your specific factoring details, like rates and which accounts are factored, are laid out in the Security Agreement, which is not publicly accessible. Essentially, a UCC works like a first mortgage on your business.
The Process of Switching Companies
The lender with the earliest UCC filing gets 'First Position' on the promised collateral. For instance, a factoring firm has first rights to collect payments on your invoices.
To switch factoring firms, the new factoring firm has to pay off the old one. At the same time, the old factoring company's claim is released, and the new company's claim is filed, similar to refinancing a house.
A 'buyout' is when the new factoring firm pays off the old one using funds from your first financing.
The Buyout Agreement details the transition process and is signed by the old factoring firm, new factoring firm, and your company. In this agreement, you agree to the 'buyout figure' provided by the old factoring company.
How is the Buyout Figure Determined:
The buyout figure is usually the total outstanding receivables minus any reserves and then plus any fees owed to the old factoring firm. It's a good idea to ask for a detailed breakdown of your figure to ensure you understand if there are any early termination fees or additional charges.
What does the buyout cost?
If you can provide new invoices to the new factoring company, which they can use to pay off the outstanding invoices at your old firm, then you wouldn't incur additional costs for the switch. However, most companies need to resubmit some of the invoices already factored with the old company to the new one. In this case, the 'overlap' invoices will incur fees from both factoring firms.
How long does a buyout take?
When you're switching factoring firms, plan for the first funding to take two to three more days than the normal setup process. The extra days will be used to verify the invoices and calculate buyout figures for your approval.
What if my situation is more complex?
Although it's not usual, the old and new factoring firms can collaborate via an Intercreditor or Subordination Agreement until the old firm is paid off. Depending on the situation, factoring firms have managed to 'draw a line in the sand,' where the old firm has rights to invoices up to a certain date, and the new firm has rights to all invoices after that date.
Questions you should have asked before signing up with your current factoring firm:
- Can I use multiple factoring firms at once? The universal answer is one, according to the Uniform Commercial Code/UCC.
- If I decide to switch factoring firms, how much notice do I need to give?
- What is the penalty for leaving without giving the required notice and can you provide an example of how the fees are calculated? Beware of 13-month contracts that require a certain monthly factoring volume.
For example, a 13-month contract where you've agreed to factor $100,000 per month at a rate of 3% means you promise to pay them $3,000 per month in factoring fees or $34,000 in total over the next year. If you want to leave after 6 months, they will charge you the fees for the remaining 6 months, which equals $13,000. This can be too expensive for most companies, especially those with low profit margins. You're stuck!
