Accounts Receivable Funding (Also known as Factoring)

Accounts Receivable funding is the selling of interest in your invoices or receivables to a private investor, or factor, at a small discount. Accounts Receivable (A/R) funding provides over $200 Billion dollars to the Industry each year. In fact, factoring is a centuries old financial service used by multi-billion dollar corporations that is now available to smaller sized businesses, to whom banks are usually reluctant to lend funds to.
 Receivables financing fills a tremendous void.

 

The Invoices to your customers for goods delivered or services rendered can be converted into a "Credit Line" from which you may draw cash to better manage your business. Draw only as much as you need and pay only for what you use. Advance funding is a tool that you can use to:

 

 Raise capital without creating debt
 Improve the cash flow of your business
 Take advantage of discounts on materials
 Make payroll
 Pay back taxes
 Let someone else handle the collection process

We can help you manage the swings in cash flow by getting you your money now; and creating a line of credit based on your receivables rather than waiting 30, 45 or 60 days. Your suppliers get paid quickly, so that you can negotiate the best pricing. In many instances, the ability to take discounts and get better pricing will make up for the cost of factoring.

In many situations, Receivable Funding is more appropriate than bank financing, because:

Is based only on the accounts receivable. A client's ability to raise cash by Receivables Funding is based on the total accounts receivable, rather than on traditional measures of financial strength and stability.

Provides continuing cash flow without the requirement of periodic payments or interim payoffs. New sales continuously create new power to obtain cash, and the business does not have to deal with renewal of loans or worry about maturity dates.

Gives a business increased access to cash as sales and receivables increase. There is no ceiling beyond which the factor must stop providing cash. The more sales a business makes, the more cash it can draw. The factor does not concentrate on the business debt/equity ratio to provide funds, as banks do.

Offers a dependable, continuing source of cash without the necessity of making separate loan applications.

Avoids the necessity of obtaining funds from venture capitalists, who receive an interest in the business and generally have a say in how the business is run.

Saves the business owner precious time waiting for a loan board to grant or deny his or her loan. Loan boards' decisions are influenced by many considerations, and the outcome is often unpredictable. With factoring, periodic delays and negotiations are eliminated, allowing the business owner time to do what he or she does best – run the business.

What are the benefits of Receivables Funding?

1. Receivables funding stimulates cash flow.
2. Receivables funding relies on the strength of a business's customers.
3. Receivables funding is accessible.
4. Receivables funding gets quick results.
5. Receivables funding is flexible
   

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