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funding option - Factoring?

What about —– A Receivables-Based Credit Line!

You already know that if you can get a line of credit at the bank, they will usually lien your businesses assets (furniture, etc.) as well as your accounts receivable.

In the cash flow industry, we offer a line of credit based solely on your accounts receivable!  If you happen to have a line of credit with your bank, too, but still need cash flow assistance, usually banks will work with us and release your receivables from their lienhold so that you can then leverage them further in the cash flow industry.

But basically — factoring is the conversion of a company’s commercial accounts receivable into immediate cash by selling those accounts at a discount. Factoring is not a loan. With factoring there is no interest to pay, nor principal to repay. No liability will appear on a company’s balance sheet due to its factoring. A Company simply sells one of its assets (accounts receivable) to obtain a more liquid asset (cash).

Since factoring is not a loan, funding is not based on the company which is factoring and its ability to repay the amount advanced. Rather, funding is based on the ability of the company’s customers (account debtor) to pay what is owed the company for the purchase of the company’s goods or services.

Factoring is, in essence, a Receivables-Based Credit Line, which needs no other collateral which is available to be drawn on when needed.   Contrary to bank lines of credit, facotring lines of credit grow as your receivables do!

 ADVANTAGES TO FACTORING:

Ø      Your Credit Line grows as your business grows

Ø      No restriction or control by the factoring company on the use of funds

Ø      No new debt is created

Ø      You are always in control of your CASH FLOW! 

In addition, factoring provides a company services other than just improved cash flow. By factoring, a company is in essence outsourcing all or a portion of its credit, collection, accounting, and monthly reporting. Factoring companies perform these services for hundreds of companies, and are experts at it. By supplying these services for their Clients, and giving their Clients the cash flow needed to grow, factoring Clients are free to do what they do best – run their business and increase sales. 

With over $60 billion of receivables being factored in the United States annually (and that figure is increasing rapidly), factoring is a quick and viable way for companies to finance their growth. 

 Fortune 500 companies such as IBM, Georgia-Pacific, and Shell Oil use this financial tool.  And now, it is available to small businesses (under $100 million/year) nationwide so that they, too, can take advantage of this proven, debt-free, and flexible method to effectively multiply working capital.

 Signs that a business could benefit from factoring include:

  • LATE PAYROLL DEPOSITS
  • IN BUSINESS FOR 3 YEARS OR LESS
  • EXPERIENCING HEAVY GROWTH
  • ALWAYS CHASING CUSTOMERS FOR PAYMENTS
  • HEAVY SEASONAL SALES
  • POOR RECORD OF INSURANCE PAYMENTS
  • TAX PROBLEMS
  • CONSISTENT HIGH BACK-LOG OF ORDERS
  • LOSS OF SIGNIFICANT CUSTOMER

 WHAT ARE THE OVERALL ADVANTAGES TO  FACTORING? 

With factoring, you can have cash on demand to fund business growth internally, meet seasonal demands, and accommodate new and larger clients who may demand longer terms. 

IMMEDIATE ADVANTAGES:

  • FAST & EASY!  Once a client has been set up, moeny can be wire-transferred to their bank account within 24-48 hours!
  • NO FINANCIAL STATEMENTS needed in most instances.
  • NO LONG-TERM CONTRACTS are required and you choose and pick which invoices to sell.
  • Once an invoice is purchased, the factor assumes full responsibility for its collection (unless another option is chosen by you.).
  • NO ADDITIONAL “DEBT” IS BEING ACQUIRED - AN ASSET IS BEING SOLD! 
  • IMPROVES CASH FLOW to help grow your business which, in turn, makes your business more attractive to conventional financing - it helps establish your business!

DAILY ADVANTAGES: 

  •  Custom-tailored program to fit your needs.
  • Get cash for operating expenses - when needed - and when you can’t get it anywhere else!ØInterested in your Customers’ credit history - not yours
  • Continuous source of Operating Cash
  • Provides Credit Services (Screening & Monitoring, Early Detection of Customer Service Problems)
  • Get instant credit reports on prospective customers and continuous monitoring of the credit status of all present customers
  • Provides detailed Management Reports
  • Faster Payments!
  • No debt creation - no monthly payments or balloon
  • No personal guarantees
  • No geographical limitations
  • Reduces internal administration so you can focus on growing your business - greater operating efficiency
  • Reduces bad debt
  • Avoids repayment of debt at inopportune time
  • Avoids giving up equity or control, as in “traditional financing”
  • Able to meet increasing sales demands
  • Off-balance sheet financing
  • Protects and improves credit rating
  • Professional collections
  • Greater Operating efficiency
  • “Time Value of Money”
  • Able to take advantage of volume, trade and other spur-of-the moment discounts by having cash available   

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