Invoice Factoring

Do you need to collect your receivables now instead of later?

Do you need to improve your cashflow, and can't rely on loans?

Most small or start-up businesses cannot rely on loan financing. They are often turned down by banks for not having established credit or have poor credit, and do not have other means of financing to rely on. These businesses face a greater challenge than established companies to:

•  Meet payroll
•  Pay suppliers on time
•  Invest for growth
•  Smooth out seasonal cashflow needs
•  Survive

To help businesses meet these challenges, we offer cost-effective and timely solutions to improve financial liquidity by collecting receivables by virtue of Invoice factoring. in advance.

In short, Factoring is the process of selling your receivables for cash. It is the service of exchanging the interest in your accounts receivables or invoices to a funding source at a nominal discount, and is used to improve liquidity of business es . Sometimes factoring is called "account receivable financing" or "advanced funding of receivables." Invoice Factoring is a service that has been in practice since the dawn of commerce. Today, factoring provides over 100 billion dollars of funds to industry each year and is an increasingly popular solution to improving cashflow of businesses of all sizes including multi-billion dollar corporations . With work of creative financiers, factoring is now easily accessible to smaller sized businesses to which banks are reluctant to lend funds. Factoring is filling a tremendous void that banks have created.

Invoice Factoring can improve the liquidity of your business . Companies often can't afford to have cash tied up in receivables 30-45 days , an average period for many companies to collect their receivables. They need the cash to meet immediate present financial demands of their business. Unfortunately, most companies cannot turn to banks since banks often have restrictive lending requirements related to cash flow, profitability, equity, and years in business which prohibit them from making loans.

Two-ten-net-thirty, or whatever the terms are, companies are more than willing to discount their prices in order to have cash NOW. To be paid now by your customers, how much would you be willing to discount your prices? 2%, 3%, 5%, 10%?

Factoring is a cost-effective and timely service that helps companies speed up their cash flow, thereby enabling it to more readily pay its current obligations and grow. Advanced funding of account receivable enables these companies to convert their invoices into instant cash. Factoring can help companies to:

•  Stay current with its vendors, payroll and taxes.
•  Go after bigger sales
•  Take advantage of vendor discounts
•  Smooth out seasonal demands for cash
•  Invest for growth in a timely basis
•  Survive  

When you factor, you do not incur any debt, and there are no monthly payments. You control your cash flow by determining how much to factor, and when.

Invoice factoring is fast, easy to set up , and easy to terminate. After a short due diligence period, an account is set up and the company forwards invoices to the funding source , representing money due from its customers . Then, the funding source advances, via wire transfer, a significant portion of the face value of an invoice and retain the remainder as a reserve. Once the funding source is paid on the invoices, the transaction is complete , and the funding source will release the reserved amount of the invoice, minus the predetermined financing fee for advancing the cash.

From a financier's standpoint, the decision to purchase invoices is influenced by the quality of your customer base and their performance as opposed to your years in business or financial strength. If you have good, reliable customers, as you should , you represent a viable factoring candidate.

Factoring fees v ary from company to company. They are also competitive with bank financing. Unlike bank financing, however, factoring fees are determined, not by the companies' creditworthiness, but by a combination of the creditworthiness of your customer , average payment cycle, invoice size and factoring volume. The fees can be as low as 2% of the invoice amount, depending on the level of risk involved.

You have control and decide which invoices you need to sell to manage your cash flow needs. You can factor your invoices daily, weekly, monthly, or seasonally.

You qualify if any of these apply to you:

Further, your accounts receivable may not be pledged as collateral for a loan, a company may qualify if the bank can exclude certain accounts receivable from the list of pledged collateral.

Fundsandloans.com maintains a wide network of funding sources which differ in their areas of specialization (size of factoring deal, industry). We can find the funding source that is the best fit for you so that you can get the best terms for your factoring deals. We operate at the highest standards of integrity and professionalism, and strive to understand your business so that we may act in your best interests.

Quick facts about Invoice factoring

Fortunately, banks are not the only source of working capital. Money can be obtained quickly through accounts receivable factoring through Funds and Loans where an ongoing line of capital can easily be established. Factoring also goes hand in hand with your financial planning, giving you some predictability in your month-to-month financial situations.

To have one of our financing specialists contact you for more information please fill in this form .

Key Terms for Factoring

Account Debtor - The customer.

Accounts Receivable - Trade credits; an amount owed by an account debtor which is considered as a liquid asset on the balance sheet and generally expected to be paid in less than ninety days.

Accounts Receivable Financing - A short-term financing technique for working capital purposes, loans to a company are collateralised by a security interest in a company's account receivables. Account receivables serve as collateral, and loans are made on a percentage of eligible assets pledged.

Acquisition - A loan to assist in acquiring the assets of a business.

Asset Based - A business loan where the borrower pledges as collateral for the loan any assets used in the conduct of his or her business. Funds are used for business related expenses. All asset-based loans are secured.

Credit - A privilege granted for the purpose of extending time to make payment on a debt.

Customer - The client's customer. The company which pays the money due under the factored invoice. Also known as the account debtor.

Dilution - The amount of risk associated with collection of the accounts receivable. It can include returns, charge-backs, trade allowances, concentrations, slow pay, bad debt and other perceived risk.

Due Diligence - Background check and research conducted by the factor to assess validity of a prospective factoring client and that client's customers.

Factor - The funding source for the client. The company which purchases the accounts receivable (invoices) from the client.

Factoring - The selling of a company's accounts receivable to a third party, in order to obtain funding.

Factors Acknowledgment Form - A form sent to the client's customer by the factor, confirming that the client's invoice does exist and that the customer will remit the payment due under that invoice to the factor.

Factors Advance - The money the factor sends to the client up front, after the verification process is complete, and before the factor receives its money from the client's customer. The advance is figured as a percentage of the face value of the factored invoices.

Factors Charge-Back - An amount of money that is owed to the factor and is deducted or Charged-Back from the reserve or availability of the line due to an agreed upon non-payment by debtor clause in the Factors contract.

Factors Client - The business which sells its accounts receivable to the factor.

Factors Fee - The fee the Factor Charges for funding the clients A/R.

Factors Reserve - A deposit maintained by the factor, to guard against disputes between the client and the customer, and to guard against bad debt losses due to customer non-payment. This is the money retained by the factor when the advance is sent to the client. The Reserve is sent to the client after the customer has paid the factor the money due on the invoice.

Factors Reserve Release - The amount of money released from the Factors Reserve once payment has been received and credited. The Reserve Release may be less any charge-back or fees associated with the services.

Factors Services - Credit Analysis, Credit Guarantees and Collection Management.

Factors Verification - Process by which the factor verifies that the product or service provided by the client was received and accepted by the customer, and that the customer intends to pay the factor the money due under the invoice. This process takes place before the factor sends the advance to the client.

Recourse - In this type of factoring, the risk of customer non-payment remains with the client. If the client's customer is financially unable to pay the money due under the invoice, the factor has recourse against the client for that money. The factor is protected against customer non-payment.

Working Capital - Loans for business expenses such as, advertising, wages, rents, and other operational costs. Often these loans are secured by tangible assets or, in the case of long-standing good credit, by the "full faith and credit" of the company.