Funding Solutions

Can your business keep up with growth and demand?

What is Factoring?
When a business sells it's unpaid but collectible and unencumbered invoices to a factor (funding source) for a discount.

 Tools Inc. receives an order from Bob's Hardware for 10 cases of hammers. Tools Inc. has produced the hammers and ships them to Bob's.
 Tools Inc. issues a $5,000 invoice to Bob's. The invoice states that Bob's has 30 days to pay for the hammers.
 Tools Inc. receives an order from Stan's Hardware for 20 cases of hammers. Since Tools Inc. does not have enough cash to produce the hammers for Stan's, they send the invoice from Bob's Hardware sale to a factor (funding source).
 The factor advances Tools inc $4,000 on the invoice. The factor keeps $1,000 on paper as a bad debt reserve. Tools inc. now has enough funds to produce the order for Stan's Hardware.
 Bob's Hardware sends payment for the invoice he received to the factor.
The factor rebates Tools Inc. the $1,000 reserve less a $250 fee. Therefore, a total of $750 is rebated to Tools Inc.
 If Tools Inc. receives another order before Stan's invoice is paid he will have confidence knowing that his business is capable of  filling that order as well!