FACTORING of ACCOUNTS RECEIVABLE

Who are best candidates?

• Companies who are no longer eligible for conventional lines of credit
• Must sell to good credits - business customers only
• No encumbrances (existing debt must be paid off)
• Companies who need working capital but want to avoid personal guarantees
• Companies with high up-front costs coupled with long customer payment terms

Key considerations?

• Factoring does not depend on a company’s cash-flow, profitability, business & personal credit and time-in-business.
• Minimum volumes are usually $ 25,000 per month, maximum $ 5,000,000 per month
• No Balance Sheet Debt - cancelable at any time
• Company has option on which invoices to sell and when they are sold
• Advance rates up to 93% of invoice amount
• Can be paperwork intensive unless managed and standardized
• Customers must be notified (risk of customer alienation and stigma is minimal)

Affordability? 

• Becomes cost-efficient at $ 60,000 per month
• No personal guarantees required.
• No compensating balance requirement
• No collateral audits
• Use of a managed program can reduce costs significantly
• No application fees or hidden charges
• Mostly non-recourse (except in cases of outright fraud)
• Using proceeds to pay creditors on discount can cut cost in half
• Allows competitive advantage by enabling longer payment terms to customers

How long does it take?

• 3 - 5 days, from submission of initial funding request and documentation.

What is a successful outcome?

• Support or restoration of positive cash-flow