Factoring Company Guide
First Step: Filling Out the Application
Your journey to enhanced cash flow begins with a simple application. Provide basic details about your business – its name, address, nature, and customer information. This is the first step towards unlocking your business's financial potential.
You may need to submit documents like an accounts receivable aging report. Remember, we assess the payment reliability of your customers to understand their overall financial health, not just their history with you.
In this initial stage, discuss your financial needs with us. This includes the volume of invoices for factoring, the advance and discount rates, and the speed of receiving advances. Factors like your industry, business tenure, and customer risk profiles will guide these terms.
Remember, the volume of your factoring is crucial. Higher invoice volumes typically lead to more favorable rates.
Based on your application, we'll determine if factoring aligns with your business needs, balancing risks and rewards. Once approved, we'll negotiate the specifics of your factoring agreement, tailored to your business's scale and requirements.
During the negotiation, you'll gain a clear understanding of the costs. Following agreement on terms, we'll initiate funding by verifying your customers' credit and the legitimacy of your invoices before providing the cash advance.
Factoring Company Benefits
Perks of Factoring:
- Say goodbye to cash flow worries and say hello to more time managing your business.
- No need to stress about monthly loan payments. Get your cash in as quick as two to four days.
- Enjoy the power of having full control over your business.
- Reduce or even eliminate costs tied to chasing down payments.
- Decide how many invoices to sell and when, giving you more control over your cash flow.
- Overcome the challenge of clients who are slow to pay.
- Boost your production and increase your sales.
- Get access to professional collection and credit checking services.
- Make sure your payroll is always met on time.
- Easily pay your payroll taxes.
- Have the ability to give cash discounts for your materials.
- Get more purchasing power, allowing you to take advantage of bulk purchase or early payment discounts.
- Improve your credit score by consistently having the cash to pay your bills promptly.
- Have cash ready for growing your business.
- Have money to spend on marketing your business.
- Improve your financial status.
- Get comprehensive and detailed reports about your accounts receivable.
Is Factoring For You
The Importance of Factoring
"A sale isn't real until you see the money." Do you find yourself unknowingly acting as a banker for your customers? Time to rethink that role.
Dive into your accounts receivable. Those invoices over 30 days late? Congratulations, you're in the lending business now – and you're not even charging interest. That's not why you got into this game, right?
Think about it: if your customers needed cash from a bank, they'd be paying interest. But with you? They're getting a free ride. And that's costing you – big time. Opportunities, growth, cash flow – all on hold while you wait for them to pay up.
You need to be in charge of your cash, not your customers. Let’s get serious about what those unpaid invoices are really costing you.
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
Gain a Competitive Edge with Quick and Continuous Cash Flow
Expert Credit Risk Assessment Included at No Extra Cost
Accurately assessing credit risk is a critical component of our factoring business. Our objective approach sets us apart from other providers.
We act as your dedicated credit department for both new and existing customers, providing you with a distinct advantage over managing these functions internally.
Imagine a scenario where a salesperson pursues a new account with the potential for substantial purchases. In their eagerness to secure the business, they may overlook credit warning signs and bypass internal credit checks. While this might result in a sale, it offers no guarantee of payment – and without payment, there is no sale.
With us, such situations are avoided. We make credit decisions based on a comprehensive understanding of the new customer's credit situation. We do not purchase invoices from customers with poor credit ratings, mitigating the risk of nonpayment. However, please understand that our involvement does not restrict your credit flexibility or negatively impact your business beyond your control.
Ultimately, the decision to do business with a new customer of questionable creditworthiness remains yours. (Nevertheless, 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 deem appropriate. You remain in control. With our participation, you gain access to comprehensive, objective, and high-quality information that empowers you to make informed credit decisions, surpassing your previous practices.
We diligently research new clients and regularly monitor the credit ratings of your existing customers. This stands in contrast to the neglect seen in many businesses, where routine credit updates on the established customer base are scarce. Such oversight can be a significant mistake.
Typically, businesses conduct credit checks only when it's too late – when problems have already escalated. In contrast, we promptly inform you of any changes in the credit status of your existing customers.
In addition to providing specific customer credit information, you benefit from comprehensive and detailed reports on your accounts receivables as a whole. Our process includes accounting details, transactional insights, aging reports, and financial management reports. This invaluable data allows you to integrate it into your sales tracking, account history, and in-depth analysis.
With over 70 years of successful experience in managing cash flow and credit, we are eager to leverage our expertise for your benefit. Let us harness our knowledge to help you achieve your financial goals, gain a competitive edge, and ensure the continuous flow of cash for your business.
How To Change Factoring Companies
Changing Your Invoice Finance Provider
Thinking of dumping your invoice finance provider? Whether they’re not up to snuff or you’re hunting for a better deal, this guide is your new best buddy. We're diving deep into UCCs, mapping out the switch-over process, and lining up the killer questions you need to ask any new finance partner you're eyeballing.
Uniform Commercial Code (UCC) Explained
Let’s start with UCCs. These are the big guns your finance company uses to stake their claim on your invoices. Here’s their role:
- They keep track of who owns what in your assets.
- Alert potential lenders about the deals you've already got.
- Make sure your financier is first in line for your invoices, kind of like a mortgage on your house.
Transitioning Between Providers
Ready to switch? It's like getting a new mortgage. Your new finance provider clears your tab with the old one, all wrapped up in a neat Buyout Agreement.
Calculating the Buyout Amount
The buyout sum includes your unpaid invoices, any reserves, and the extra fees from your previous financier. Always demand the full details to avoid any stealth charges or early exit fees, especially if the new deal seems sweeter financially.
Cost Implications of a Buyout
Switching doesn’t have to hit your wallet hard. Bring in new invoices to your new financier to keep it cost-neutral. But beware – rehashing old invoices could mean double fees. And yes, there might be discounts, but keep your old provider in the know to skip extra costs.
Time Considerations
The switcheroo can take a bit longer than usual, thanks to all the buyout math and approvals. Remember, the amount you owe might keep ticking up, so having a savvy company guide you through can be a game-changer.
Complex Scenarios
In some rare cases, your old and new financiers might both have claims on your invoices until everything's paid off. Not common, but good to know.
Questions to Ponder Before Committing
- Ever thought about using more than one invoice finance company?
- What’s the fine print on leaving your current provider, any penalties included?
- How quick is the new provider with processing your payments?
- Who are your points of contact at the new finance company?
- Will you be paying for mailing your invoices?
- Any hidden fees for credit checks or adding new customers?
- When does the new provider start reserving funds?
