Factoring and Purchase Order Financing
Can’t afford to wait 30 to 60 days to get paid by your commercial or government customers? This is a common challenge for many business owners and often leads to cash flow problems. Factoring can help you fix this problem by providing your company with an advance on your slow paying invoices. This gives you the needed funds to pay employees and suppliers, enabling you to grow. We can get you a competitive quote - today.
Rates as low 1.5% for qualified clients. Advances as high as 85%
Get an instant factoring quote. Or call (866) 730 1922 USA & Canada
Financing for companies that sell products or services. This program can be used in most industries including technology, energy, manufacturing, consulting and business services.
Financing for trucking companies, freight brokers and commercial transportation companies.
Specialized financing for companies that provide services and products to state and federal governments.
Specialized financing for staffing and temporary employment firms in the business and medical sectors.
Specialized program for companies that provide security guards to commercial, industrial and government sites.
Specialized factoring program for subcontractors in the construction industry.
Specialized program for healthcare practitioners and medical providers that bill private insurance companies, Medicare and Medicaid.
Trade financing solutions
Specialized financing for companies that resell products to other companies or government entities. This product is designed for resellers, importers and distributors.
What is invoice factoring?
Most business owners have to offer their customers up to 60 days to pay an invoice. Offering payment terms is expected in today's marketplace, especially if you have large customers. However, not every company can afford to wait that long for payment. Factoring solves this problem by financing your open invoices. It provides your company with immediate funds that can be used to operate the business and pay critical expenses. It also enables you to offer payment terms to your customers because you will no longer need to wait up to eight weeks to get paid for your invoices.
Factoring is relatively easy to use and can be integrated into most businesses. Transactions are usually structured using two payment installments and follow this format:
- Your company delivers the goods/services to the client
- Your company issues an invoice
- You sell your invoice to a factoring company, who immediately advances you the 1st installment. This installment averages 80% of the invoice (this varies) and is usually sent to you within one business day.
- Once your customer pays the invoice, the factoring company advances the remaining 20%, less the funding fee.
The qualification criteria for factoring invoices is simpler than the criteria for most other products. In general, your company must:
- Have commercial or government customers with good credit
- Have reasonable profit margins
- Have invoices that are free of liens or encumbrances
- Be free of major legal/tax problems
The most important requirement is that your customers must have good commercial credit. In effect, the transaction is being financed based on your client's ability to pay your invoice in full when it's due. Checking the commercial credit of your customers is one of our most important functions when financing your invoices. To do so, we rely on a number of credit bureaus such as Dun and Bradstreet, Experian and Ansonia. However, there are not our only source of credit performance. We also use public sources and our own trade experience to make funding determinations. One of the advantages of working with us is that we can help you evaluate the credit worthiness of your customers and help you improve your credit decisions.
Using factoring to finance your business has a number of benefits. They include:
- It gives you predictable cash flow
- It minimizes the uncertainty of when you'll get paid for your invoices
- It's flexible. The line is tied to your sales and will grow with your business
- It's easy to obtain and can be set up in days
Flexibility and Growth
Although the biggest benefit of factoring your invoices comes from the improved cash flow, the most important benefit is the line's growth flexibility. The financing line is directly tied to your revenues and can increase as your sales to credit worthy clients grow. This adaptive feature is not commonly found in other products and is what makes factoring financing an ideal solution for growth minded companies.
The cost of a factoring facility is usually determined by the amount of invoices purchased by the factoring company and how long it takes your customers to pay them. However, there are other factors that come into play when determining cost. They are:
- The credit quality of your customers
- The size of their invoices
- The number of customers you wish to factor
- Your industry
- Your company background
If you would like to get a preliminary idea of the cost of factoring, please go here for an online quote.
Are factoring and purchase order financing easy to obtain?
Obtaining an invoice financing line is a lot faster, simpler and easier than applying for conventional business financing. The biggest requirement is that your company must have reputable and creditworthy customers, since your invoices are what backs the transaction. This makes it an ideal product for companies whose main asset is a solid roster of reliable customers.
Questions? Call (866) 730 1922. Services in the USA and in Canada.
Need more information?
Do you need more information to make an informed decision and determine if we are the right solution for you? We have a number of articles in our resource center that answer frequently asked questions and provide application tips. You can also find out more about us in Google+.
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