A Quick Guide To Business Factoring
June 1, 2009 by Accounts Receivable Factoring
Filed under About Factoring
When businesses need cash in a speedy manner, they look to a factoring company to receive funds from their unpaid and open invoices. The factoring company, or factor, will review your accounts receivable and upon approval, will advance you a certain percentage of the overall value of your submitted invoices. Business factoring is a great tool because your personal and business credit history is not considered during the process. Product and service-based businesses will greatly benefit from business factoring. Qualifications for factoring services include your monthly invoices and the credit worthiness of those that owe you.
To start the process, gather and make copies of the outstanding invoices you want funded and make sure all of the required information is filled out. The factor will perform a variety of checks on your clients to make sure they will be able to fulfill their invoice. This information will also help the factor to determine how much you can receive and the discount rate they will charge. After the information has been verified, the factor will send out a notice of assignment, which informs your clients that their invoices should be paid to the factor and not your business. You can expect to receive your funds in two to five days, or even 24 hours if the factor allows for online invoicing. Your initial payment will range from 70 to 90 percent of the total value of your submitted invoices and you will receive the remainder once the factor has collected the rest from your clients.
There are many different elements that make up the costs of business factoring. Expect to pay one to five percent of the accounts receivable total value as the discount rate. Extra costs include what type of factoring and billing you choose, the reliability of your clients ability to pay, the type of industry you work in, set up costs and how many invoices you submit.
The benefits of factoring include the opportunity for financial advances, quick access to funds, the opening for more funding and the chance to focus on your business while the factor works on your collections. On the other side, disadvantages include paying a higher discount rate if your clients deem themselves as slow paying or have poor credit. If your client fails to pay their balance, this can also increase the total costs of the factoring services. Properly assess your clients’ ability to pay before you start the factoring process.
You will have the option of choosing between recourse and non-recourse factoring.
Recourse factoring is more affordable, but if a client defaults on a payment, you will be held accountable. Non-recourse is more costly, but the factor will hold all responsibility if your client cannot fulfill their payments.
Once you decide on which type of options you will opt for, there are few key items that will help lead you to the right vendor. Compare vendors and their customer support during the process, experience in the field, professionalism with your clients, references and how long the company has been in business before you sign the contract. Also keep in mind that you can negotiate for more money up front and submit fewer invoices of higher amounts to keep your total costs low.
Thanks to Merrin Muxlow for contributing this article to our Factoring blog:
To start the process, gather and make copies of the outstanding invoices you want funded and make sure all of the required information is filled out. The factor will perform a variety of checks on your clients to make sure they will be able to fulfill their invoice. This information will also help the factor to determine how much you can receive and the discount rate they will charge. After the information has been verified, the factor will send out a notice of assignment, which informs your clients that their invoices should be paid to the factor and not your business. You can expect to receive your funds in two to five days, or even 24 hours if the factor allows for online invoicing. Your initial payment will range from 70 to 90 percent of the total value of your submitted invoices and you will receive the remainder once the factor has collected the rest from your clients.
There are many different elements that make up the costs of business factoring. Expect to pay one to five percent of the accounts receivable total value as the discount rate. Extra costs include what type of factoring and billing you choose, the reliability of your clients ability to pay, the type of industry you work in, set up costs and how many invoices you submit.
The benefits of factoring include the opportunity for financial advances, quick access to funds, the opening for more funding and the chance to focus on your business while the factor works on your collections. On the other side, disadvantages include paying a higher discount rate if your clients deem themselves as slow paying or have poor credit. If your client fails to pay their balance, this can also increase the total costs of the factoring services. Properly assess your clients’ ability to pay before you start the factoring process.
You will have the option of choosing between recourse and non-recourse factoring.
Recourse factoring is more affordable, but if a client defaults on a payment, you will be held accountable. Non-recourse is more costly, but the factor will hold all responsibility if your client cannot fulfill their payments.
Once you decide on which type of options you will opt for, there are few key items that will help lead you to the right vendor. Compare vendors and their customer support during the process, experience in the field, professionalism with your clients, references and how long the company has been in business before you sign the contract. Also keep in mind that you can negotiate for more money up front and submit fewer invoices of higher amounts to keep your total costs low.
Thanks to Merrin Muxlow for contributing this article to our Factoring blog:
What is Factoring ?
May 25, 2009 by Accounts Receivable Factoring
Filed under About Factoring
The accounts receivable and the responsibility for the collection are sold rather than provided as loan collateral, and the client must notify all of its customers of the new arrangement. This can involve a very substantial payment being made right at the start, with most factors paying 70% to 90% through initial advance of the invoice amount followed by a small additional payment, through reserve release, once they collect the invoice.
Over the course of time, factors may offer the liable individual or entity a discount from 2% to 5% or more on the outstanding debt. Factors advance funds under one of two conditions: non-recourse, where the factor assumes all the liability for the invoice, this costs quite a bit extra but can be advantageous, with insurance typically covering 80% of a debt rather than the whole thing, or recourse, where the factor can come back to the business should the invoice become uncollectible and require reimbursement.
Even though some factors buy the invoices from a company, their contracts are very specific that if an invoice is not paid within a certain period of time, usually 30 to 90 days, the factor will reclaim any advances it has made against the invoice. Factoring is designed to be more beneficial to the seller of the account than to the debtor. The seller receives money, while the buyer makes a profit by buying the account for less than what it was valued at and then collecting on it.
Factoring allows a buyer to purchase these accounts for around 25% less than what they are actually worth. Setting up a factoring deal can be done more quickly than most other forms of finance. The staff at factoring companies are more commercial than at other lending institutions, and will work to find a solution for potential client companies. There are some possible disadvantages, the main ones being cost and the fact that clients have to deal with the factoring companies.
Factoring can also be a gamble for the factor, because there may be bad debts or other obstacles to collecting the funds. Therefore, factors have begun running credit checks and assessing the financial health of potential clients before entering into a factoring arrangement. Clients provide annual reports and other indicators of financial health to factors before they are approved. Factors often establish a credit line with clients and dictate the amount of credit that their clients can offer to customers.
Thanks to Joshua R. Conklin for contributing this article to our Factoring blog:
Over the course of time, factors may offer the liable individual or entity a discount from 2% to 5% or more on the outstanding debt. Factors advance funds under one of two conditions: non-recourse, where the factor assumes all the liability for the invoice, this costs quite a bit extra but can be advantageous, with insurance typically covering 80% of a debt rather than the whole thing, or recourse, where the factor can come back to the business should the invoice become uncollectible and require reimbursement.
Even though some factors buy the invoices from a company, their contracts are very specific that if an invoice is not paid within a certain period of time, usually 30 to 90 days, the factor will reclaim any advances it has made against the invoice. Factoring is designed to be more beneficial to the seller of the account than to the debtor. The seller receives money, while the buyer makes a profit by buying the account for less than what it was valued at and then collecting on it.
Factoring allows a buyer to purchase these accounts for around 25% less than what they are actually worth. Setting up a factoring deal can be done more quickly than most other forms of finance. The staff at factoring companies are more commercial than at other lending institutions, and will work to find a solution for potential client companies. There are some possible disadvantages, the main ones being cost and the fact that clients have to deal with the factoring companies.
Factoring can also be a gamble for the factor, because there may be bad debts or other obstacles to collecting the funds. Therefore, factors have begun running credit checks and assessing the financial health of potential clients before entering into a factoring arrangement. Clients provide annual reports and other indicators of financial health to factors before they are approved. Factors often establish a credit line with clients and dictate the amount of credit that their clients can offer to customers.
Thanks to Joshua R. Conklin for contributing this article to our Factoring blog:
SmartLeadz™ has an array of powerful and effective marketing tools and techniques designed for your success. For more information about purchasing factoring leads please call:
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PHONE: 585-478-3335
April 6, 2009 by Accounts Receivable Factoring
Filed under About Factoring
What is factoring?
Factoring is an innovative method of business financing that allows clients to get an accelerated payment on their slow paying invoices. Traditionally, when a company offers its services to another business, they need to wait between thirty to sixty days to get paid. Although companies that have a large cash cushion in the bank can absorb the cost of waiting to be paid, small and medium sized businesses cannot. This can jeopardize a company’s ability to meet existing payment obligations, or worse, prevent it from capitalizing on new opportunities.
This is where factoring can be a very helpful tool. A factor can provide a company with an advance payment on its accounts receivable. The factor then waits to be paid by the clients’ customers, while the client gets use of the funds immediately. The transaction is structured as the sale of a financial right, rather than as a loan. Because of this, the factor focuses more on the strength of the customer paying the receivable rather than on the financial strength of the client. This makes factoring the ideal financial tool for new, small and emerging businesses.
Keys features when looking for a factor
Selecting the right factor for your company can be a very complex task. Given the importance of the factoring relationship to your company’s ability to succeed and grow, it is critical that you do the proper due diligence when selecting a factoring partner. Here is a list of some of the criteria that are important when selecting a factoring financing company:
· Factors’ Comfort Zone: Almost every factor will advertise that they can work with an account that requires as little as $10,000 per month and as high as a few million dollars per month. Although that may be true in principle, the reality is that managing a small volume account is very different from managing a multi-million dollar account. Most factors tend to develop a comfort zone or “preferred specialty” when it comes to client size. When selecting a factor, always ask about the size of their typical client. Ideally, the size of your business should not be significantly below or above that figure.
·Monthly Minimums: Most factors will only take clients that commit to transact a minimum financing volume every month. The advantage of committing to monthly minimums is that the factor will offer your company better terms. The main disadvantage is that if your factored volume drops, your company could be liable for making up the difference in fees. When selecting a factor, be sure to select one whose minimums are well below your expected minimums, or better yet, try and find a factor with no minimums.
·Recourse vs. Non Recourse: Recourse is a term that defines the ability of a factor to re-sell the invoices back to a client if an invoice does not get paid within a given period of time. Most factors prefer to operate in recourse mode. However, there are a number of factors who offer non-recourse agreements. Under a non-recourse agreement, the factor will absorb the losses on an invoice if the account debtor becomes financially insolvent. In effect, non-recourse factors offer some protection against bad debt. Although you are generally better with a non-recourse factor, most recourse agreements work well enough.
·Contract Duration: Typically, factoring contracts require a minimum term of one year or more. Whereas longer-term contracts enable a factor to offer you better pricing, they can also lock your company into a factoring arrangement that outlives its usefulness. Your best bet is to try and find a factor that will allow you to easily terminate a contract (giving reasonable notice) once the service has outlived its usefulness.
·Fee Structure: Factoring fees vary significantly across the industry and are usually dependent on a) the financial strength of your customers b) your monthly volumes c) the duration of your contract and d) the payment cycle of your receivables. The fee (also known as “discount”) can be as high as 7% per month for small ticket deals (less than $30K per month) to as low as a couple of points for companies that wish to factor several hundred thousand of dollars.
·Level of Service: A very important criterion when selecting a factoring company is choosing a company that will give you the appropriate level of service. The industry is very diverse, and there are many factors that charge very low fees and provide a very impersonal “mass approach” to service. Conversely, there are factors that provide a “high touch” level of service, for slightly higher rates. Most companies tend to choose the factor with the lowest rates (and usually lowest level of service) thinking that they will save money. In the long run, they end up regretting the decision. You are usually better off looking for a factor that offers a better service, even if it comes at a slight premium.
Should you work with a factoring broker?
One way to simplify the process of selecting a factor is to work with a factoring broker. A good broker will help you determine if factoring is the best solution for your company and will help you find the factor that is best suited to serve you. The broker will also help you position your company to a factor in the best possible way, maximizing the chances of getting the funding your company needs with the best possible terms. One of the most significant advantages of working with a factoring broker is that they will help you save time. As seen in the previous section, the process of evaluating a factoring company can be both tedious and time consuming. A broker can help you sidestep the issue since they will do all the work of finding the best factor for you. Lastly, most factoring brokers are compensated through a finders fee by the factoring company, so you will not have to pay them any fees for their service.
Thanks to Marco Terry for contributing this article to our Factoring blog:
Factoring is an innovative method of business financing that allows clients to get an accelerated payment on their slow paying invoices. Traditionally, when a company offers its services to another business, they need to wait between thirty to sixty days to get paid. Although companies that have a large cash cushion in the bank can absorb the cost of waiting to be paid, small and medium sized businesses cannot. This can jeopardize a company’s ability to meet existing payment obligations, or worse, prevent it from capitalizing on new opportunities.
This is where factoring can be a very helpful tool. A factor can provide a company with an advance payment on its accounts receivable. The factor then waits to be paid by the clients’ customers, while the client gets use of the funds immediately. The transaction is structured as the sale of a financial right, rather than as a loan. Because of this, the factor focuses more on the strength of the customer paying the receivable rather than on the financial strength of the client. This makes factoring the ideal financial tool for new, small and emerging businesses.
Keys features when looking for a factor
Selecting the right factor for your company can be a very complex task. Given the importance of the factoring relationship to your company’s ability to succeed and grow, it is critical that you do the proper due diligence when selecting a factoring partner. Here is a list of some of the criteria that are important when selecting a factoring financing company:
· Factors’ Comfort Zone: Almost every factor will advertise that they can work with an account that requires as little as $10,000 per month and as high as a few million dollars per month. Although that may be true in principle, the reality is that managing a small volume account is very different from managing a multi-million dollar account. Most factors tend to develop a comfort zone or “preferred specialty” when it comes to client size. When selecting a factor, always ask about the size of their typical client. Ideally, the size of your business should not be significantly below or above that figure.
·Monthly Minimums: Most factors will only take clients that commit to transact a minimum financing volume every month. The advantage of committing to monthly minimums is that the factor will offer your company better terms. The main disadvantage is that if your factored volume drops, your company could be liable for making up the difference in fees. When selecting a factor, be sure to select one whose minimums are well below your expected minimums, or better yet, try and find a factor with no minimums.
·Recourse vs. Non Recourse: Recourse is a term that defines the ability of a factor to re-sell the invoices back to a client if an invoice does not get paid within a given period of time. Most factors prefer to operate in recourse mode. However, there are a number of factors who offer non-recourse agreements. Under a non-recourse agreement, the factor will absorb the losses on an invoice if the account debtor becomes financially insolvent. In effect, non-recourse factors offer some protection against bad debt. Although you are generally better with a non-recourse factor, most recourse agreements work well enough.
·Contract Duration: Typically, factoring contracts require a minimum term of one year or more. Whereas longer-term contracts enable a factor to offer you better pricing, they can also lock your company into a factoring arrangement that outlives its usefulness. Your best bet is to try and find a factor that will allow you to easily terminate a contract (giving reasonable notice) once the service has outlived its usefulness.
·Fee Structure: Factoring fees vary significantly across the industry and are usually dependent on a) the financial strength of your customers b) your monthly volumes c) the duration of your contract and d) the payment cycle of your receivables. The fee (also known as “discount”) can be as high as 7% per month for small ticket deals (less than $30K per month) to as low as a couple of points for companies that wish to factor several hundred thousand of dollars.
·Level of Service: A very important criterion when selecting a factoring company is choosing a company that will give you the appropriate level of service. The industry is very diverse, and there are many factors that charge very low fees and provide a very impersonal “mass approach” to service. Conversely, there are factors that provide a “high touch” level of service, for slightly higher rates. Most companies tend to choose the factor with the lowest rates (and usually lowest level of service) thinking that they will save money. In the long run, they end up regretting the decision. You are usually better off looking for a factor that offers a better service, even if it comes at a slight premium.
Should you work with a factoring broker?
One way to simplify the process of selecting a factor is to work with a factoring broker. A good broker will help you determine if factoring is the best solution for your company and will help you find the factor that is best suited to serve you. The broker will also help you position your company to a factor in the best possible way, maximizing the chances of getting the funding your company needs with the best possible terms. One of the most significant advantages of working with a factoring broker is that they will help you save time. As seen in the previous section, the process of evaluating a factoring company can be both tedious and time consuming. A broker can help you sidestep the issue since they will do all the work of finding the best factor for you. Lastly, most factoring brokers are compensated through a finders fee by the factoring company, so you will not have to pay them any fees for their service.
Thanks to Marco Terry for contributing this article to our Factoring blog:
How Does Factoring Work?
March 18, 2009 by Accounts Receivable Factoring
Filed under About Factoring
Step by Step Instructions on How to Leverage Factoring for Your Business
Do you need access to short term cash to grow your business? Factoring is an effective strategy that allows your business to borrow against its invoices or accounts receivable for a small fee. This will allow you to gain access to your hard earned dollars quickly so that you can reinvest them into your business or to pay outstanding invoices. Waiting for a vendor or client payment can be frustrating, especially if it is over a month or more away. Factoring offers your business an affordable financing solution.
How does Factoring Work?
Factoring is a finance tool designed to allow businesses to access cash quickly so that they can use it to operate and expand their businesses. One of the most attractive features of factoring is that it is actually not a business loan; it is an advance payment based upon invoices or accounts receivable owed to the business. The process of factoring is quite simple; first, the factoring company purchases an invoice from your business at a discount. Next, the factoring company will work to collect the invoice payment. Once they have collected the business payment, they will pay your business the rest of the amount owed. The fee that the factoring company charges will vary based on the volume of business that you do with them, the length of time that the invoice takes to be paid and in some cases, the credit of the company that owes your business money.
There are 2 primary forms of factoring: recourse and non-recourse. Companies that use recourse factoring make your company liable for any invoices that are not paid in full. Non-recourse factoring takes the risk of the invoice when they choose to purchase it from you. Factoring companies that leverage the non-recourse strategy will generally offer your business a lower purchase price to compensate for the added risk that they are taking. Depending on your current invoice payment history, you should choose the most financially viable option for your business.
Advantages of Factoring
When a business is evaluating available financing options, the process can become overwhelming. Also, if the business does not have established credit or the business owner does not want to co-sign on the debt, there are very limited financing options available. Factoring is not considered debt to the business and is not a form of a business loan. In fact, factoring companies are not concerned with your business’s debts; they are only concerned with the credit worthiness of the company that they are buying the invoice for. With this in mind, factoring is a great strategy for companies that are not only new, but those that have a short track record, weak financial statements or who cannot get traditional financing.
Another major advantage of factoring is that your business can receive cash flow earlier, typically in 1-2 business days rather than waiting for your customers to pay their invoices. While you are paying a nominal fee for the factoring services, the process speeds up, allowing you and your business to leverage those dollars to grow your business.
Factoring companies are also generally more effective at collecting payment for invoices as they specialize in this and have the dedicated resources to focus on this task. In comparison, your small business may not have those resources allocated to collect your invoices as efficiently or effectively.
Here are some additional benefits of factoring for your business:
* Early Payment Discounts: With factoring, you will be in a position to pay your own invoices early, possibly being able to take advantage of early payment discounts.
* Build your Business Credit: By paying your bills earlier, you will be helping your business to build its credit with other businesses and important vendors.
* Flexibility: Many factoring companies do not require you to factor all of your invoices. This will allow you to choose the invoices that you would like to factor; for example, if most of your customers pay quickly, you will only want to factor invoices of customers that are slower to pay. Also, you would want to focus on larger invoices for factoring as you may have depleted cash flow to fulfill those larger orders; cash flow earlier will help you to gain the much needed profits on these larger sales.
Process for Implementing Factoring within your Business
Factoring provides several advantages for businesses of all sizes. Follow this step by step guide to allow factoring to work for your business:
Step 1:
Research a variety of companies that provide the type of services that your company requires for financing, starting by deciding whether you are going to use a non-recourse or resource factoring company. You can search using your search engine, by using the local phone book or by asking for referrals. Choose 3-5 that you will compare and contact each one so that you can speak with a live representative. Ask questions so that you fully understand their program and their fees; make sure to ask what all of their fees are and their average turn around time to fund an invoice once it is submitted.
Step 2:
In addition to the brief mention above of comparison, you will also want to read the factoring company’s policy and procedures, time lines, feedback from previous customers and you will want to review the company’s application. While fees are certainly a consideration, compare the companies to choose the best balance between cost and service provided.
Step 3:
Now that you have narrowed down the factoring companies to 1-2 finals, schedule additional phone time to speak with a representative. Review the contract with the company representative to ensure that you understand all of the details. Probably to most important thing that gets overlooked is the fine print as it relates to fees. Just like in any financial transaction, you will want to read through and understand time lines, what can cause a fee to increase or decrease and anything else that is specific to this factory company’s restrictions and guidelines. Also, be sure that you understand how the percentage payments change by 30, 60, 90 and 120+ day payments.
Step 4:
Now that you have a full understanding of the company and the paperwork, you are ready to get started. Organize your paperwork and submit it to your chosen factoring company.
Step 5:
Once you have been approved, you will need to develop a system to send in your invoices. If you currently manage this process, add time into your calendar to manage it. If you are going to use an administrative person, make sure that you go through the details and the paperwork for them to accurately complete. Once you submit your first factoring invoice, within a few days you will receive your first payment.
By implementing these steps, you will be able to leverage factoring within your business structure. Factoring can help your business to pay down expenses quicker and also to focus on growth.
Thanks to Thomas McCarthy for contributing this article to our Factoring blog:
Do you need access to short term cash to grow your business? Factoring is an effective strategy that allows your business to borrow against its invoices or accounts receivable for a small fee. This will allow you to gain access to your hard earned dollars quickly so that you can reinvest them into your business or to pay outstanding invoices. Waiting for a vendor or client payment can be frustrating, especially if it is over a month or more away. Factoring offers your business an affordable financing solution.
How does Factoring Work?
Factoring is a finance tool designed to allow businesses to access cash quickly so that they can use it to operate and expand their businesses. One of the most attractive features of factoring is that it is actually not a business loan; it is an advance payment based upon invoices or accounts receivable owed to the business. The process of factoring is quite simple; first, the factoring company purchases an invoice from your business at a discount. Next, the factoring company will work to collect the invoice payment. Once they have collected the business payment, they will pay your business the rest of the amount owed. The fee that the factoring company charges will vary based on the volume of business that you do with them, the length of time that the invoice takes to be paid and in some cases, the credit of the company that owes your business money.
There are 2 primary forms of factoring: recourse and non-recourse. Companies that use recourse factoring make your company liable for any invoices that are not paid in full. Non-recourse factoring takes the risk of the invoice when they choose to purchase it from you. Factoring companies that leverage the non-recourse strategy will generally offer your business a lower purchase price to compensate for the added risk that they are taking. Depending on your current invoice payment history, you should choose the most financially viable option for your business.
Advantages of Factoring
When a business is evaluating available financing options, the process can become overwhelming. Also, if the business does not have established credit or the business owner does not want to co-sign on the debt, there are very limited financing options available. Factoring is not considered debt to the business and is not a form of a business loan. In fact, factoring companies are not concerned with your business’s debts; they are only concerned with the credit worthiness of the company that they are buying the invoice for. With this in mind, factoring is a great strategy for companies that are not only new, but those that have a short track record, weak financial statements or who cannot get traditional financing.
Another major advantage of factoring is that your business can receive cash flow earlier, typically in 1-2 business days rather than waiting for your customers to pay their invoices. While you are paying a nominal fee for the factoring services, the process speeds up, allowing you and your business to leverage those dollars to grow your business.
Factoring companies are also generally more effective at collecting payment for invoices as they specialize in this and have the dedicated resources to focus on this task. In comparison, your small business may not have those resources allocated to collect your invoices as efficiently or effectively.
Here are some additional benefits of factoring for your business:
* Early Payment Discounts: With factoring, you will be in a position to pay your own invoices early, possibly being able to take advantage of early payment discounts.
* Build your Business Credit: By paying your bills earlier, you will be helping your business to build its credit with other businesses and important vendors.
* Flexibility: Many factoring companies do not require you to factor all of your invoices. This will allow you to choose the invoices that you would like to factor; for example, if most of your customers pay quickly, you will only want to factor invoices of customers that are slower to pay. Also, you would want to focus on larger invoices for factoring as you may have depleted cash flow to fulfill those larger orders; cash flow earlier will help you to gain the much needed profits on these larger sales.
Process for Implementing Factoring within your Business
Factoring provides several advantages for businesses of all sizes. Follow this step by step guide to allow factoring to work for your business:
Step 1:
Research a variety of companies that provide the type of services that your company requires for financing, starting by deciding whether you are going to use a non-recourse or resource factoring company. You can search using your search engine, by using the local phone book or by asking for referrals. Choose 3-5 that you will compare and contact each one so that you can speak with a live representative. Ask questions so that you fully understand their program and their fees; make sure to ask what all of their fees are and their average turn around time to fund an invoice once it is submitted.
Step 2:
In addition to the brief mention above of comparison, you will also want to read the factoring company’s policy and procedures, time lines, feedback from previous customers and you will want to review the company’s application. While fees are certainly a consideration, compare the companies to choose the best balance between cost and service provided.
Step 3:
Now that you have narrowed down the factoring companies to 1-2 finals, schedule additional phone time to speak with a representative. Review the contract with the company representative to ensure that you understand all of the details. Probably to most important thing that gets overlooked is the fine print as it relates to fees. Just like in any financial transaction, you will want to read through and understand time lines, what can cause a fee to increase or decrease and anything else that is specific to this factory company’s restrictions and guidelines. Also, be sure that you understand how the percentage payments change by 30, 60, 90 and 120+ day payments.
Step 4:
Now that you have a full understanding of the company and the paperwork, you are ready to get started. Organize your paperwork and submit it to your chosen factoring company.
Step 5:
Once you have been approved, you will need to develop a system to send in your invoices. If you currently manage this process, add time into your calendar to manage it. If you are going to use an administrative person, make sure that you go through the details and the paperwork for them to accurately complete. Once you submit your first factoring invoice, within a few days you will receive your first payment.
By implementing these steps, you will be able to leverage factoring within your business structure. Factoring can help your business to pay down expenses quicker and also to focus on growth.
Thanks to Thomas McCarthy for contributing this article to our Factoring blog:
Thomas McCarthy has designed, developed & implemented financial systems for many years. Thomas was a Factoring customer for over 7 years prior becoming a business owner and webmaster.
Download our FREE EBook “Growing Your Company Without Debt” learn how Invoice Factoring may be right for your company at: http://www.DfsFactoring.com
What is its level of accounts receivable?
March 1, 2009 by Accounts Receivable Factoring
Filed under More Factoring Answers
Can you answer Kay’s MOM’s question about Factoring?:
Camp Depot is a wholsesale office supplier. Annual sales are $2,500,000 with 95% of sales on credit. If the firm’s average collection period is 41 days, what is its level of accounts receivable? assume a 360-day year
Factoring Software
Camp Depot is a wholsesale office supplier. Annual sales are $2,500,000 with 95% of sales on credit. If the firm’s average collection period is 41 days, what is its level of accounts receivable? assume a 360-day year
Factoring Software
