I need a Factoring company that can approved by the phone or on-line within a a few hours?
May 16, 2009 by Accounts Receivable Factoring
Filed under More Factoring Answers
Can you answer overstockto’s question about Factoring?:
What i need is a factoring company that at the time of the approval of net 30-60-90 i” be able to call them and see if they will approve or not my client for such terms and factor right away at the time of the sale. Witch company is best to suit my for company.
What i need is a factoring company that at the time of the approval of net 30-60-90 i” be able to call them and see if they will approve or not my client for such terms and factor right away at the time of the sale. Witch company is best to suit my for company.
By the way i’m a small company in California
Thank you Lending guru,
However we are a new company and we need a company with no minimuns
Invoice Factoring Company
What is the best factoring company to work with small business?
May 7, 2009 by Accounts Receivable Factoring
Filed under More Factoring Answers
Can you answer overstockto’s question about Factoring?:
The best rates. Most reliable; and will work with small numbers.
I’m In USA California
Sorry I mean Factoring invoice company.
We sell invoice to the factoring companies
Account Receivables Collection
The best rates. Most reliable; and will work with small numbers.
I’m In USA California
Sorry I mean Factoring invoice company.
We sell invoice to the factoring companies
Account Receivables Collection
What is Factoring?
April 13, 2009 by Accounts Receivable Factoring
Filed under About Factoring
What is factoring?
Accounts receivable financing, also known as factoring, is a powerful financial tool that has fueled the growth and success of a number of companies. Factoring enables companies to capitalize on their unpaid receivables by selling them to a factoring company for immediate payment. With factoring, companies immediately get paid for their invoiced work from the factoring finance company, while the factoring company waits to be paid by the customers. Factoring strengthens a business’ cash position by shortening the time to get invoices paid to 48 hours and providing the needed funds to meet current expenses and target new opportunities.
Factoring Benefits
As opposed to loans and lines of credit that require that the client have tangible assets and strong financials, factoring relies more heavily on the financial strength of the clients’ customer. This is a critical feature, since many new and small businesses do not meet the financial criteria of traditional lending institutions. However, many small businesses have a roster of financially strong customers that can be leveraged. Factoring empowers businesses to capitalize on their customer list, and provides them with a tool to transform outstanding receivables into immediate cash, without generating debt. Since Factoring is not a loan, it is an ideal financial product for the following:
o New and emerging businesses including small and home businesses, consultants and solo-preneurs. o Businesses with financially strong customers o Businesses that are preparing to grow significantly o Business with intangible assets (e.g. consultants) o Businesses that do not want to take a loan
An additional benefit of factoring is that the factor usually assumes part of the clients’ credit risk for the customer. This means that if the customer becomes financially insolvent due to bankruptcy and does not pay the invoice, the factor will assume the loss. This is a critical service for small companies who may not be able to afford the bankruptcy of a customer.
Costs
The costs of a factoring transaction - also known as the discount - vary based on a number of variables such as the financial strength of the customer and the amount being factored. Generally, the discount is a percentage of the invoice’s face value that increases with time until the invoice gets paid. Small businesses, those that have between $20,000 and $300,000 in yearly revenues, can expect to pay a discount rate of about 2% for every ten (10) days that the invoice remains unpaid. Businesses with factorable revenues in excess of $300,000 can expect lower discount rates.
Factoring in Action: BSP, Inc. Case Study
Business Services and Products, Inc. (BSP, Inc.) is a small fictional company, which provides business consulting and equipment to local companies. It has $300,000 of annual revenues and during the past year BSP Inc. has enjoyed significant sales growth. Although most business owners would be very happy to manage such a company, Jane Sullivan, BSP Inc’s president, is very worried about her company’s financial position.
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past. Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business opportunities because she was unsure of the company’s financial ability to hire and pay for additional staffers. Unfortunately, BSP Inc. did not have a large enough financial cushion in the bank to afford paying employees while waiting for 45 days new clients to pay their invoices.
The following table provides an overview of BSP, Inc’s current financial position.
Business Services and Products, Inc (w/o financing)
Yearly sales $300,000 Lost new sales opportunities Unknown Total Sales $300,000
Variable Costs(60% of Sales) $180,000 Fixed Costs(Rent, phones, etc) $20,000 Total Costs $200,000
Profit (Sales - Costs) $100,000
Although the company’s prospects appear great, Jane may have to stall her company’s growth until she builds a large enough cash cushion at the bank to finance her company’s growth.
After careful consideration, Jane decided that a factoring line of working capital could help strengthen her company’s financial position. Furthermore, factoring her invoices would enable BSP Inc. to take on new customers and continue growing, knowing that she could capitalize on her slow paying customers. BSP Inc.’s financing agreement will provide the company with an advance of 70% of her invoiced services. This means that the company can get 70% of the face value of the factored invoices within 24 to 48 hours of submitting them to the factor. The remaining 30% of the funds, less the factoring fees, will be quickly rebated as soon as the customer pays their invoice.
This line of working capital strengthened the company’s financial position and bank account, enabling Jane to pay for new employees to service new contracts. Jane also decided to use the extra capital to pay her vendors early, obtaining quick payment discounts and helping to reduce the cost of factoring.
BSP Inc. customers pay their invoices within 30 days of receipt. The discount (factoring fee) for these invoices is 6%. Every time an invoice is paid, the factor rebates BSP Inc. the remaining 30% that was not advanced less the factoring fee. This means that once the transaction is completed, the factor rebates 24% (30% - 6%) to BSP Inc.
Thanks to the factoring line of working capital, Jane was also to secure an additional $120,000 worth of business, bringing her annual revenues to $420,000. The following table shows BSP Inc.’s financial position a year after using factoring.
Business Services and Products (with factoring)
Existing Sales $300,000 New Sales $120,000 (factored) Total Sales $420,000 Variable Costs (60% of Sales) $252,000 Fixed Costs (Rent, phones, etc.) $20,000 Cost of Factoring (6% of $120,000) $7,200 Total Costs $279,200 Net Profit (Sales - Costs) $140,800
As can be seen from the above table, factoring helped BSP Inc. increase profits substantially from $100,000 to $140,800 - a 40% increase. It placed BSP Inc. on a more stable financial footing, priming it for growth. Furthermore, the cost impact of factoring on the bottom line was minimal, as it was easily absorbed by the additional business, showing that factoring was paid for directly by the growth.
Thanks to Marco Terry for contributing this article to our Factoring blog:
Accounts receivable financing, also known as factoring, is a powerful financial tool that has fueled the growth and success of a number of companies. Factoring enables companies to capitalize on their unpaid receivables by selling them to a factoring company for immediate payment. With factoring, companies immediately get paid for their invoiced work from the factoring finance company, while the factoring company waits to be paid by the customers. Factoring strengthens a business’ cash position by shortening the time to get invoices paid to 48 hours and providing the needed funds to meet current expenses and target new opportunities.
Factoring Benefits
As opposed to loans and lines of credit that require that the client have tangible assets and strong financials, factoring relies more heavily on the financial strength of the clients’ customer. This is a critical feature, since many new and small businesses do not meet the financial criteria of traditional lending institutions. However, many small businesses have a roster of financially strong customers that can be leveraged. Factoring empowers businesses to capitalize on their customer list, and provides them with a tool to transform outstanding receivables into immediate cash, without generating debt. Since Factoring is not a loan, it is an ideal financial product for the following:
o New and emerging businesses including small and home businesses, consultants and solo-preneurs. o Businesses with financially strong customers o Businesses that are preparing to grow significantly o Business with intangible assets (e.g. consultants) o Businesses that do not want to take a loan
An additional benefit of factoring is that the factor usually assumes part of the clients’ credit risk for the customer. This means that if the customer becomes financially insolvent due to bankruptcy and does not pay the invoice, the factor will assume the loss. This is a critical service for small companies who may not be able to afford the bankruptcy of a customer.
Costs
The costs of a factoring transaction - also known as the discount - vary based on a number of variables such as the financial strength of the customer and the amount being factored. Generally, the discount is a percentage of the invoice’s face value that increases with time until the invoice gets paid. Small businesses, those that have between $20,000 and $300,000 in yearly revenues, can expect to pay a discount rate of about 2% for every ten (10) days that the invoice remains unpaid. Businesses with factorable revenues in excess of $300,000 can expect lower discount rates.
Factoring in Action: BSP, Inc. Case Study
Business Services and Products, Inc. (BSP, Inc.) is a small fictional company, which provides business consulting and equipment to local companies. It has $300,000 of annual revenues and during the past year BSP Inc. has enjoyed significant sales growth. Although most business owners would be very happy to manage such a company, Jane Sullivan, BSP Inc’s president, is very worried about her company’s financial position.
Most of BSP Inc.’s customers are large companies with a good reputation for always paying their invoices. However they always take between 30 to 45 days to pay them. BSP Inc., however, needs to pay their employees every two weeks and their vendors every four weeks. This discrepancy between the time that customers pay their bills and the time BSP Inc. needs to pay their employees and vendors has created cash flow problems in the past. Furthermore, these cash flow problems have already caused Jane to delay payroll twice this year and have placed her trade (vendor) credit in jeopardy multiple times. This has also caused her to pass on a number of significant business opportunities because she was unsure of the company’s financial ability to hire and pay for additional staffers. Unfortunately, BSP Inc. did not have a large enough financial cushion in the bank to afford paying employees while waiting for 45 days new clients to pay their invoices.
The following table provides an overview of BSP, Inc’s current financial position.
Business Services and Products, Inc (w/o financing)
Yearly sales $300,000 Lost new sales opportunities Unknown Total Sales $300,000
Variable Costs(60% of Sales) $180,000 Fixed Costs(Rent, phones, etc) $20,000 Total Costs $200,000
Profit (Sales - Costs) $100,000
Although the company’s prospects appear great, Jane may have to stall her company’s growth until she builds a large enough cash cushion at the bank to finance her company’s growth.
After careful consideration, Jane decided that a factoring line of working capital could help strengthen her company’s financial position. Furthermore, factoring her invoices would enable BSP Inc. to take on new customers and continue growing, knowing that she could capitalize on her slow paying customers. BSP Inc.’s financing agreement will provide the company with an advance of 70% of her invoiced services. This means that the company can get 70% of the face value of the factored invoices within 24 to 48 hours of submitting them to the factor. The remaining 30% of the funds, less the factoring fees, will be quickly rebated as soon as the customer pays their invoice.
This line of working capital strengthened the company’s financial position and bank account, enabling Jane to pay for new employees to service new contracts. Jane also decided to use the extra capital to pay her vendors early, obtaining quick payment discounts and helping to reduce the cost of factoring.
BSP Inc. customers pay their invoices within 30 days of receipt. The discount (factoring fee) for these invoices is 6%. Every time an invoice is paid, the factor rebates BSP Inc. the remaining 30% that was not advanced less the factoring fee. This means that once the transaction is completed, the factor rebates 24% (30% - 6%) to BSP Inc.
Thanks to the factoring line of working capital, Jane was also to secure an additional $120,000 worth of business, bringing her annual revenues to $420,000. The following table shows BSP Inc.’s financial position a year after using factoring.
Business Services and Products (with factoring)
Existing Sales $300,000 New Sales $120,000 (factored) Total Sales $420,000 Variable Costs (60% of Sales) $252,000 Fixed Costs (Rent, phones, etc.) $20,000 Cost of Factoring (6% of $120,000) $7,200 Total Costs $279,200 Net Profit (Sales - Costs) $140,800
As can be seen from the above table, factoring helped BSP Inc. increase profits substantially from $100,000 to $140,800 - a 40% increase. It placed BSP Inc. on a more stable financial footing, priming it for growth. Furthermore, the cost impact of factoring on the bottom line was minimal, as it was easily absorbed by the additional business, showing that factoring was paid for directly by the growth.
Thanks to Marco Terry for contributing this article to our Factoring blog:
Freight Factoring- the Easy Way to Finance Your Transportation Company
April 9, 2009 by Accounts Receivable Factoring
Filed under About Factoring
Transportation Company owners have to face a typical situation in dealing with clients who pay the freight bills in 30 to 60 days. They have daily cash expenses to take care of. They have to pay the driver’s wages, fuel bills, and vehicle and tire repair expenses. The expenses have to be met urgently while the clients would delay paying the amount for many days. This puts them into a tricky situation with regard the cash flow for their needs. Unless the company has cash in the bank, they cannot afford to wait to be paid.
The owners try to sort this out by arranging for a loan from the bank. But the banks usually do not finance businesses that have less than three years of profit and financial statements to show. So what other option does a freight company have? They have a better option than business loan in freight factoring. It is a quick pay tool to convert slow paying client freight bills into cash. It does not need the clients to pay early. It is the factoring company who will buy the freight bills on delivery of the load and give you some percentage of the amount of the freight bills.
They even collect the bills from the clients on the due date. Generally they would provide you an advance of 90% of the bill amount. The remaining 10% is paid after the customer makes the bill payment. A small factoring fee is taken from this 10% based on how long the invoice is factored and the monthly volume of factored invoices. Discount rates range between 1.5% and 4% per month depending upon the above factors.
Freight factoring is better than conventional loans in more ways than one. It is easy to get it and that too in just a few days. There are certain limitations to the amount of loan you are taking, but if you consider the freight factoring option it has no such limits. As your sales grow so does your factoring amount! Thus your financing is directly related to your transportation company’s growth. If you arrange with the factoring company to collect the bills on your behalf, you are relieved of credit collection. You can use that time and money to invest more in your business. Factoring companies also regularly provide you with receivables and payment statements, which help you to streamline your business.
Most factoring companies buy the bills using non-recourse invoice factoring. Under this agreement the factoring company bears the risk of non-payment due to insolvency of your customer.
Not many banks provide factoring services. However there are many new factoring companies coming up who have professionals working with them and offer good services and competitive prices. There are many companies coming up, who advertise on the Internet also. You could check them out and make a long-term contract with a company that gives you and your customer quick and courteous service.
Freight factoring gives you the advantage of improving the cash flow and helps you to concentrate on the growth of your business. It is a very good finance option. Rather one may say that it is an extension of your business. Thus if you have a transportation company you may use the services of a factoring company and take your business to the next level.
Thanks to Kris Koonar for contributing this article to our Factoring blog:
The owners try to sort this out by arranging for a loan from the bank. But the banks usually do not finance businesses that have less than three years of profit and financial statements to show. So what other option does a freight company have? They have a better option than business loan in freight factoring. It is a quick pay tool to convert slow paying client freight bills into cash. It does not need the clients to pay early. It is the factoring company who will buy the freight bills on delivery of the load and give you some percentage of the amount of the freight bills.
They even collect the bills from the clients on the due date. Generally they would provide you an advance of 90% of the bill amount. The remaining 10% is paid after the customer makes the bill payment. A small factoring fee is taken from this 10% based on how long the invoice is factored and the monthly volume of factored invoices. Discount rates range between 1.5% and 4% per month depending upon the above factors.
Freight factoring is better than conventional loans in more ways than one. It is easy to get it and that too in just a few days. There are certain limitations to the amount of loan you are taking, but if you consider the freight factoring option it has no such limits. As your sales grow so does your factoring amount! Thus your financing is directly related to your transportation company’s growth. If you arrange with the factoring company to collect the bills on your behalf, you are relieved of credit collection. You can use that time and money to invest more in your business. Factoring companies also regularly provide you with receivables and payment statements, which help you to streamline your business.
Most factoring companies buy the bills using non-recourse invoice factoring. Under this agreement the factoring company bears the risk of non-payment due to insolvency of your customer.
Not many banks provide factoring services. However there are many new factoring companies coming up who have professionals working with them and offer good services and competitive prices. There are many companies coming up, who advertise on the Internet also. You could check them out and make a long-term contract with a company that gives you and your customer quick and courteous service.
Freight factoring gives you the advantage of improving the cash flow and helps you to concentrate on the growth of your business. It is a very good finance option. Rather one may say that it is an extension of your business. Thus if you have a transportation company you may use the services of a factoring company and take your business to the next level.
Thanks to Kris Koonar for contributing this article to our Factoring blog:
Freight Factoring provider The Phoenix Capital Group can provide competitive finance rates for Freight Bill Factoring. For a no hassle quote visit our website http://www.phoenixcapitalgroup.com.
Factor Your Way to Success with Business Factoring
March 30, 2009 by Accounts Receivable Factoring
Filed under About Factoring
For your business to succeed even with a lot of credit clients, you will require a steady inflow of cash at regular intervals in order to meet your daily expenses and fund your expansion plans. This will especially be tough if you are a start-up business or if you are yet to break even in your business.
Most businesses would initially try and arrange a bank loan to tide over the cash-flow problem. But banks have rigid rules that require to be met. They also need sufficient collateral to safeguard their end in case you fail to pay back the loan. Your audited financial statements will also have to be submitted and if you are a start-up company or if you have not yet started registering profits, then you might as well kiss that loan goodbye. If you do manage to lay your hands on the loan, your joy could be short-lived since you will need to repay the loan along with interest in the form of monthly installments.
Another method of arranging finance is by tying up with a business factoring company. This method provides flexible financing since it does not require any collateral or repayment through installments. In this mode of financing, a business factoring company will ‘buy’ off your credit invoice from you. They will then proceed to wire you the invoice amount minus their factoring fee, which could be 1.5% to 5% of the invoice value. This percentage would depend on the credit period that you have extended to your clients, the credibility of your client as decided by the factoring company and the total value of business that you can provide to your factoring company. This essentially means that you get immediate cash even against your credit invoices.
This could right away improve your cash flow and could help you to meet your business expenses comfortably. You could pay your suppliers and employees on time, take on larger projects and even go in for bulk purchases in order to get a higher discount on your purchases. You could also expand your business without any financial restraints. Your reputation in your market might also get enhanced if you pay your suppliers on time. You would also have a choice in deciding the method of factoring. If you decide to go in for recourse factoring, then the responsibility of collecting the payment would lie with you.
However, if you decide to use the non-recourse arrangement with the factoring company, then the factoring company would assume the responsibility of collecting the payment from your clients. This feature could be very useful in freeing up your collection staff and they could then be diverted towards other duties. Thus, business factoring could not only provide you with instant cash against credit sales but could also free you from the burden of running after your clients for your payments. Since business factoring provides finance against your pending invoices, this process has the potential to grow along with your business.
Therefore, business factoring can prove to be a boon for your business since it provides you with ready cash when you need it the most, and that too without the hassles of lengthy repayment schedules. By utilizing the money sensibly, you can surely factor your way to success with business factoring.
Thanks to Kris Koonar for contributing this article to our Factoring blog:
Most businesses would initially try and arrange a bank loan to tide over the cash-flow problem. But banks have rigid rules that require to be met. They also need sufficient collateral to safeguard their end in case you fail to pay back the loan. Your audited financial statements will also have to be submitted and if you are a start-up company or if you have not yet started registering profits, then you might as well kiss that loan goodbye. If you do manage to lay your hands on the loan, your joy could be short-lived since you will need to repay the loan along with interest in the form of monthly installments.
Another method of arranging finance is by tying up with a business factoring company. This method provides flexible financing since it does not require any collateral or repayment through installments. In this mode of financing, a business factoring company will ‘buy’ off your credit invoice from you. They will then proceed to wire you the invoice amount minus their factoring fee, which could be 1.5% to 5% of the invoice value. This percentage would depend on the credit period that you have extended to your clients, the credibility of your client as decided by the factoring company and the total value of business that you can provide to your factoring company. This essentially means that you get immediate cash even against your credit invoices.
This could right away improve your cash flow and could help you to meet your business expenses comfortably. You could pay your suppliers and employees on time, take on larger projects and even go in for bulk purchases in order to get a higher discount on your purchases. You could also expand your business without any financial restraints. Your reputation in your market might also get enhanced if you pay your suppliers on time. You would also have a choice in deciding the method of factoring. If you decide to go in for recourse factoring, then the responsibility of collecting the payment would lie with you.
However, if you decide to use the non-recourse arrangement with the factoring company, then the factoring company would assume the responsibility of collecting the payment from your clients. This feature could be very useful in freeing up your collection staff and they could then be diverted towards other duties. Thus, business factoring could not only provide you with instant cash against credit sales but could also free you from the burden of running after your clients for your payments. Since business factoring provides finance against your pending invoices, this process has the potential to grow along with your business.
Therefore, business factoring can prove to be a boon for your business since it provides you with ready cash when you need it the most, and that too without the hassles of lengthy repayment schedules. By utilizing the money sensibly, you can surely factor your way to success with business factoring.
Thanks to Kris Koonar for contributing this article to our Factoring blog:
Freight Factoring Company Phoenix Capital group is a one stop transportation services company. Freight Shipments and related Factor Growth has increased in the USA as shown. To learn more or to start your Freight Factoring visit: http://www.phoenixcapitalgroup.com
