a. What kind of terms are you giving your customers?

b. How long does it take them to pay?

c. Could you manage your business better as well as finance its growth if you had that money sooner?

a. It may sound like GFR is a collection agency but we're not.

b. We advance money to your business based upon your invoices to your

business customers and we wait for them to pay. Meanwhile, you have the use of your own

money to better manage your business and to finance your companies growth.

a. Just because you haven't been exposed to this kind of financial service

doesn't mean that it doesn't exist.

b. Factoring has been a powerful financial tool for centuries but until

recently only very large companies could qualify for factoring.

c . Now small to medium size companies can qualify and receive the

benefits of this financial service.

a. Instead of waiting for your customers to pay your invoices, would your

business benefit from having most of that money right away?

b. Would you be more comfortable with a factoring program that doesn't

require a minimum monthly volume and doesn't require an annual contract.

c.  How would it feel to know that you control your money instead of your customers

or your bank?

a. Great! How big is it? How much of it do you use?

b. Would you like to have access to larger amounts of funding? We can

work in cooperation with your existing credit line to make that possible.

c.  How would you like to have working capital that works the same as a line of credit

without incurring any debt? 

a. The fact that your company does qualify for factoring makes a powerful

and positive statement about the strength of your finances and the factor's level

of confidence in your business.

b. If your neighbor received a multi-million dollar credit line from his bank,

what would you think of him? We're providing a virtually unlimited credit line to

you based only upon your receivables as collateral.

c. In the process of verifying an invoice we tell your customer that you

have been provided an unlimited credit line based on your accounts receivable

and we are providing receivables management in conjunction with that credit line.

a. You are doing it for your customers. Factoring will enable you to

continue to provide the high quality of products and services that they have come to

expect. Your customers will also continue to enjoy the generous trade terms i.e.

30 days or more, that factoring will enable you to continue to provide for their

benefit.

b. In our communications with your customers we only refer to this service

as receivables management in conjunction with the unlimited credit line you have

received to accommodate the growth that you are experiencing

a. Yes,

a. The check is made payable to the factor.

a.  The check comes directly to the factor.

I know how important that is to you. I'll be happy to get an answer to your

question, but I don't know enough about your business to obtain a rate quote.

So tell me:

What terms do you give your customers?

How long does it actually take your customers to pay?

What is the size range of your invoices?

Where do most of them fall in that range?

Who are your customers?

What are your monthly or annual sales?

What is your gross profit margin?

What are your accounts receivable right now?

How much is current, i.e. under 30 days?

How much is over 90 days old?

How much bad debt did you write off last year?

Are there any liens or judgments against your firm?

Are there (SBA) loans, credit lines, or bankruptcy?

The burden of risk is on the factor who will give you money while you only

give him paper. When we have a thorough understanding of your business

situation, we can arrive at an appropriate and responsive fee/advance structure.

a. Compared to a bank that isn't willing to lend you the money, or all the

money you need, and if they do, they charge or impose many of the following:

Points and Service Charges

Application Fees

Appraisal and Auditing Fees

Compensating Balances

Inadequate Loan Limits

Pledge of All Your Assets

Extra Accounting/Bookkeeping Expense

Documentary Stamps & Recording Fees

Legal Fees & Escrow Costs

Title Insurance Premiums

Lender Inspection Fees

Credit Insurance Premiums

Renewal or Extension Fees

Collateral Valuation Fluctuation

Environmental Surveys

Possible Credit Impairment

Loss of Control & Regulatory Exposure

Lender Ownership Change/Larger Bank Syndrome 

b. Compared to spending 1 or 2 days each week chasing money or

receivables instead of concentrating on running your business and getting more

business

c. Compared to lost profits because you can't fill new and larger orders?

d. Aren't you willing to pay (an estimated 4 or 5 cents) out of each dollar to ensure the full

use,benefit, and pleasure of the remaining (an estimated 95-96 cents)?

e. Don't simply compare the factoring fees to your current dollar volume.

Look at the fees in relation to the enlarged volume that you will reach by the

creative use of factoring.

a. It's tempting to multiply by 12 to annualize the fees, but let's examine

this in detail. If you borrow $100,000 from the bank at 12 % you‘ll make

monthly payments of $1000. In a year you will have paid $12000 and still owe

the $100,000.

If you factor $100,000 each month for a year at a 5 point discount, at the

end of a year your fees would total $60,000. You would have had the benefit of

$1,200,000 (12x100,000) and the fees would still represent 5%. And you don't

have to pay it back!

b. How often have you wished you were in a COD business? If you could

convert your business into COD simply by offering a discount across the board to

your customers, how much of a discount would you offer?

Dun & Bradstreet conducted a survey and learned that many

businessmen offered as much as 15% discounts while most offered at least a

10% discount. We're going to convert your business into COD for half that

discount!

c. Bottom line questions: Can you better manage and enjoy your

business with faster cash flow? Can you make more money if you had access to

better cash flow? Can you make your business grow with better cash flow? Are

you willing to spend 4 or 5 points to net an additional 20-25-30-35% on our

money?

a. If you've been short of cash, you probably haven't been taking

advantage of all the discount opportunities for early payment from your venders and or

haven't been buying in the most economical quantities. These discounts

alone will offset a substantial portion of the cost of factoring.

b. You could raise your price by just 1% across the board and pay for

factoring one third of your receivables.

c. The core issue is whether you can do more business if you factor.

Because fixed costs and overhead don't increase in proportion to sales, the

added volume made possible by factoring usually results in a much higher

percent of profit on the added business and on your business, overall. For

example:

Before Factoring With Factoring

Sales Revenue $100,000 $200,000

Cost of Goods $60,000 $120,000 (60%)

Gross Profit $40,000 $80,000 (40%)

Overhead $36,000 (36%) $48,000 (24%)

Net Profit $4000 (4%) $27,000 (13.5%)

If you mean that you don't want to pay 60 day fees but still need to speed

up cash flow, we have several solutions:

First, you could factor just the quick paying customers since they would be

your least expensive source of cash. The fees would be less and the reserves

would be paid sooner.

Secondly, you could delay the funding of invoices for 30 days so that you

would only pay 30 day fees on your 60 day payers. In the process you've

converted all your customers into the equivalent of 30 day payers!

Third, use this service as a factoring credit line. Submit your invoices as

you generate them, but draw advances only when and in the amounts needed.

The fees will be pro-rated, i.e. you'll pay fees in proportion to the funds and the

time that are used. If you take half of the normal advance, the fees will be half

and you'll always be in complete control of your cash flow.

After the first month you are virtually COD, so the percent of advance isn't

really an issue, is it? In the second month you receive the current advance and

the reserves from last months' paid invoices.

Not necessarily. You have several alternatives:

Exchange invoices.

Offset against reserves.

Return the advance i.e. buy back

Let's examine your real purpose in factoring. Are you factoring to access

funds to grow and enhance your business, or are you trying to transfer the risk of

doing business with your customers to a third party, the factor? Non-recourse

factoring contracts, when carefully analyzed, only eliminate the risk of bankruptcy

of the customer. They don't insulate the client from the risk of disputes with the

customer. The most common cause of refusal to pay an invoice is a dispute over

quality, delivery, or specification. None of these risks are eliminated or even

reduced by a non-recourse contract.

A non-recourse factor must endure the risk of financial failure of a

customer, so it stands to reason that customers will be placed under a "credit

microscope" and the risky will be rejected. If

the client is factoring to access additional funds, a non- recourse contract may

be contrary to the clients best interests, because it may actually limit access to

funds.

A modified recourse factor with receivables/credit insurance, as we are,

can insulate the client from financial failure of his customers yet maximize access

to funds. When the client stands behind his customers, the factor is willing to

fund the marginally creditworthy customers because he has recourse to the

clients' other receivables.

a. Carried on the factors books is face value.

b. Taxes paid on the face value.

c. Insured for face value.

d. Risk is on the face value.

e. The face value is the only constant. The advance may vary and the fees

can be pro-rated.

a. When you pledge your house as collateral for a mortgage you can't

pledge just the top floor or just the garage. The term, accounts receivable, may

sound like a plural but it's one class of collateral and can't be divided.

b. There is no collateral value in having recourse only to the nonperforming

receivables.

Corporations don't make mistakes and don't commit fraud. People do.

You are simply promising not to commit fraud.