Answers to Frequently Asked Questions
Money is loaned on a revolving basis secured by accounts receivable and other assets. We can also assist in collecting and administering the receivables to optimize the turn on receivables and the client’s cash flow. The client controls the extension of customer credit. Annual clean-ups, compensating balances and other bank requirements are unnecessary.
Traditional or old-line factoring is fairly straightforward and is designed for long-term relationships. It involves the purchase of receivables without recourse and with notification to the client’s customer. The factor buys the receivables created by a client’s sales and then collects the proceeds directly from the client’s customer. After the factor buys a receivable, it assumes the credit risk on that receivable. If the client’s customer doesn’t pay because of a credit problem, the factor must assume the loss.
Is there a difference between factoring and accounts receivable financing?
Accounts receivable financing is borrowing money against your accounts receivable and factoring is a more complete service which includes credit checking on customers along with guarantees (without recourse) on pre-approved accounts.
How much is this going to cost?
This can only be determined when we have more information concerning the amount you plan to borrow and your volume.
How much volume do we have to do?
The minimum requirement is $500,000 annually.
What will our advance rate be?
Advance rates average between 70% and 80%.
Our typical contract is for a 12 month period.
What type of information do you need from me?
We will need a financial statement on the business, accounts receivable and payable agings and personal financial statements.
How long will it take to qualify?
Funding usually takes place within 48 hours from the time we receive a complete package from you, which consists of the items mentioned above.