Factoring Company Guide
First Step: Filling Out the Application
Begin a transformational journey for your business’s finances with a simple yet impactful step: completing our application. This is where you start turning your business's financial aspirations into reality.
Fill us in on your company's basics, along with customer details. This isn't just administrative work; it's the groundwork for your financial revolution.
Discuss your financial requirements with us. What’s the scale of invoices you wish to factor? What terms are you looking for? This is a tailored strategy session, designed to align with your business's unique financial goals.
The volume of factoring is a critical element. Higher volumes translate to more favorable terms, empowering your business with better financial leverage.
Based on your application, we'll evaluate whether factoring is the right strategy for your business. Once approved, we enter into detailed negotiations, where the scale of your factoring directly impacts the terms, paving the way for more beneficial agreements.
Throughout the negotiation, we ensure you have a clear understanding of the costs. After reaching an agreement, we proceed with the funding process – a crucial step in achieving your business's financial empowerment.
Factoring Company Benefits
Factoring: Your Gateway to Financial Freedom
- Redirect your focus from cash flow worries to growing your business empire.
- Eliminate the stress of loan repayments; access cash within days, not weeks.
- Stay in command of your business’s future.
- Reduce or say goodbye to the costs of chasing down payments.
- Master your cash flow by selecting the right invoices at the right time.
- Gain a financial edge over slow-paying clients.
- Use stable cash flow to amplify your production and sales.
- Take advantage of experts in payment collection and credit checking.
- Ensure your payroll is always funded and on time.
- Always have the funds to cover your payroll taxes.
- Unlock the power of bulk buying with available cash reserves.
- Strengthen your buying power for better deals and savings.
- Improve your credit score with consistent cash flow for bill payments.
- Have the necessary funds for ambitious business growth.
- Allocate sufficient resources for your marketing strategies.
- Improve the appearance and accuracy of your financial statements.
- Benefit from comprehensive reports on your accounts receivable for smarter financial decisions.
Is Factoring For You
The Importance of Factoring
"Only when the payment is made, is a sale truly complete." This adage rings true, especially if you find yourself playing the role of a banker for your clients. Time for a financial health check.
Scrutinize your accounts receivable. Those overdue accounts? They signify interest-free credit you're extending. This is likely a detour from your original business objectives.
Think about it: your customers would incur interest charges on a bank loan. In your case, not only are you not earning interest, but you're also missing out on vital capital utilization. The opportunity cost here is sig
The Importance of Factoring
"Remember, a sale's not done until you've got the cash." Feeling like you're stuck in the role of a part-time banker for your clients? Let's break it down.
Have a gander at your accounts receivable. Those overdue accounts are more than just numbers – they're interest-free loans you're dishing out. That's not why you're in business, is it?
Put it this way: if your clients borrowed from a bank, they'd be coughing up interest left and right. But with you? They're getting a sweet deal. Meanwhile, you're missing out on cash that could be pumping up your own business. Think about what that's costing you in missed chances.
You’re in the business of selling, not financing. It's time to flip the script and stop letting your clients use your cash to float their business. Let’s get real about the costs here.
nificant.
By allowing extended payment terms, you're inadvertently financing your customers' businesses. It's essential to recognize the financial implications and adopt a more efficient approach to managing your accounts receivable.
Factoring History
Factoring: Empowering Businesses for Success
Welcome to the world of factoring, where businesses find the financial support they need to thrive. Whether you're a business owner, an aspiring entrepreneur, or seeking innovative financial solutions for your employer, factoring can play a crucial role in helping you achieve your financial goals.
It's interesting to note that factoring has often been overlooked and remains relatively unknown in the business world. Despite this, it serves as the backbone for many successful American businesses, unlocking billions of dollars each year and enabling thousands of enterprises to grow and prosper.
So, what exactly is factoring? Simply put, it involves purchasing commercial accounts receivable (invoices) from businesses at a discounted rate. In today's competitive landscape, offering credit terms to customers is often necessary to secure business. However, this can create cash flow challenges, particularly for new or struggling companies that rely on steady and timely payments.
Factoring, with its long and rich history, traces back 4,000 years to the time of Hammurabi, the king of Mesopotamia, often considered the birthplace of civilization. Mesopotamians were pioneers in developing writing, establishing business codes, and introducing the concept of factoring.
Over time, factoring gained traction in various civilizations. The Romans, for instance, were early adopters, introducing the sale of promissory notes at discounted rates. In the American colonies, factoring played a crucial role before the revolution. Merchant bankers in London and Europe provided funds in advance for goods such as cotton, furs, and timber, allowing colonists to continue their operations without being hindered by delayed payments from European customers.
It's important to highlight that these historical arrangements differ from modern banking relationships. In fact, modern banks would have caused delays, waiting to collect payments from European buyers before disbursing funds to the colonists. This impractical process led to the emergence of factors in colonial times who provided advances against accounts receivable, enabling clients to maintain their operations while awaiting payment.
As the Industrial Revolution unfolded, factoring adapted to address credit concerns while maintaining its core principles. Factors began assisting clients in assessing customer creditworthiness, establishing credit limits, and guaranteeing payment for approved customers. Today, this approach, known as non-recourse factoring, is commonly practiced in the business world.
Before the 1930s, factoring primarily served the textile and garment industries, which inherited the practice from the colonial economy. However, after the war years, factors recognized the potential to expand factoring to other industries reliant on invoicing, leading to its broader adoption.
In the present day, factors come in various shapes and sizes. Some operate as divisions within large financial institutions, while many others are independently owned entrepreneurial endeavors. The popularity of privately owned factors surged in the 1960s and 1970s when high-interest rates made traditional bank financing less accessible. This trend continued in the 1980s, driven by increasing interest rates and changes in the banking industry. As banks became more expensive and inflexible due to regulatory constraints, small business owners sought alternative financing options. Factoring emerged as an increasingly popular choice.
Each year, thousands of businesses leverage factoring to sell billions of dollars in accounts receivable. By doing so, they unlock cash flow, achieve profitability, drive growth, and, in some cases, secure their very survival. Factoring empowers businesses by providing them with the financial support they need to thrive in today's competitive market.
Credit Risk
Boost Your Business with Quick Cash and Expert Credit Risk Assessment
Get the Edge Without Extra Fees
Accurately evaluating credit risk is a critical component of our factoring services. We excel at this function, providing an objective perspective that few clients can match.
As part of our comprehensive offering, we act as your dedicated credit department for both new and existing customers. This arrangement gives you a distinct advantage over managing these processes internally, without any additional charges.
Consider a scenario where a salesperson pursues a new account with the potential for significant sales. In their eagerness to secure the business, they may overlook warning signs of credit difficulties and bypass your internal credit checks. While this approach may result in a quick sale, it offers no guarantee of timely payment, which is essential for sustained success.
With us, you won't encounter such issues. We make credit decisions based on a comprehensive understanding of the new customer's credit situation. We avoid purchasing invoices from customers with poor credit ratings, minimizing the risk of nonpayment. It's important to note that our involvement doesn't imply a tightening of credit that could adversely affect your business beyond your control.
Ultimately, the decision to do business with a new customer of questionable creditworthiness remains in your hands. (However, we reserve the right to say, "We told you so!")
While we may not purchase those invoices, you retain the freedom to extend credit terms as you see fit. You maintain full control. Regardless of the decisions you make, our participation ensures you have access to comprehensive, objective, and high-quality information to make informed credit decisions, surpassing your previous practices.
We conduct thorough research on new clients and regularly monitor the credit ratings of your existing customers. This stands in stark contrast to the common practice of neglecting routine credit updates for established customers. Such neglect can lead to costly oversights.
Most businesses conduct credit checks only when problems have already spiraled out of control. In contrast, we promptly inform you of any changes in the credit status of your existing customers, allowing you to take proactive measures.
In addition to providing specific customer credit information, we offer comprehensive reports on your accounts receivables. These reports include accounting details, transactional insights, aging reports, and financial management reports. This data empowers you to analyze sales performance, track account history, and make well-informed decisions.
With over 70 years of successful experience managing cash flow and credit, we are eager to leverage our expertise for your benefit. Let us put our knowledge to work, helping you achieve your financial goals and giving your business the competitive edge it needs. Experience the benefits of quick cash and expert credit risk assessment without any extra fees.
How To Change Factoring Companies
Changing Your Invoice Finance Provider
Thinking about kicking your invoice finance provider to the curb? Whether they're not cutting it or you just want something better, this guide is your ticket. We're covering the A to Z of UCCs, how to switch providers without a hitch, and the essential questions that'll make sure you're teaming up with the right new financial partner.
Uniform Commercial Code (UCC) Explained
First things first, UCCs. They're a big deal in the invoice finance world. Here's what they do:
- Track who's got rights to your assets.
- Give a heads-up to other lenders about your current finance deals.
- Ensure your finance company is first in line for your invoices, just like a bank with a mortgage on your house.
Transitioning Between Providers
Switching finance providers is pretty much like refinancing your house. Your new finance provider will pay off the old one, and you all sign off on a Buyout Agreement.
Calculating the Buyout Amount
Figuring out the buyout amount involves unpaid invoices, reserves, and any extra fees your old financier might throw in. Always ask for a detailed cost breakdown to avoid surprises and check if your new deal is a better fit financially.
Cost Implications of a Buyout
Making the switch can be smooth on your wallet if you're bringing new invoices to your new financier. But watch out – reusing old invoices might lead to double charges. Some financiers offer discounts, but remember to tell your old provider in time to avoid extra fees.
Time Considerations
Switching isn't a snap-of-the-fingers kind of deal. It adds a few days for all the calculations and paperwork. The amount you owe could keep changing, so team up with a pro to make it as smooth as possible.
Complex Scenarios
In some rare situations, both your old and new financiers might have their fingers in the pie of your invoices until the previous balance is paid off. It's not typical, but it happens.
Questions to Ponder Before Committing
- Thinking about playing the field with multiple invoice finance companies?
- What's the fine print on changing providers, including any exit fees?
- How does the new provider handle payments, and what's the turnaround time?
- Who are your main contacts at the new finance company?
- Who's covering the costs for sending out your invoices?
- Are there extra charges for credit checks or adding new clients?
- When do they start holding back reserves?
