WHAT WILL FACTORING COST ME
?
This frequently asked questions about
factoring is provided to clarify the many
misconceptions about factoring. What is
factoring, what is not and how it can really help
your business. Any questions that are not
covered here can be answered by email of by simply
calling 1-800-346-0136.
Q:
A: NO! Factoring is defined as the purchase of a
company's receivables as opposed to a loan using the
receivables as collateral
Back to
Top
Q:
A: Most any business to business receivables can be
factored. The major determining factor is the credit
worthiness of your clients. Part of the due diligence
is to examine the payment history of your clients. If
they have at least a (six) 6 month history of prompt
payments, they will be eligible for factoring.
Back to
Top
Q:
A: No, a benefit to factoring is having the factor help
you make wise credit decisions regarding your
customers. New customers will be viewed on a case by
case basis. Generally, if you have a solid customer who
has solid references, they will be accepted for
factoring immediately.
Back to
Top
Q:
A: Banks often have restrictive lending requirements
relating to cash flow, profitability, equity, and years
in business which prohibit them from making loans.
Factoring companies are not in the lending business.
The decision to purchase invoices is influenced by the
quality of your customer base and their performance as
opposed to years in business or financial strength.( 3
C’s = Credit-Cash Flow-Collateral )
Back to
Top
Q:
A: Fast! Once approved, most factors pay within 24 to
48 hours of receipt of the invoice.
Back to
Top
Q:
A: It depends on monthly volume in relation to the tax
lien and if the government agency will work with us.
After we complete our due diligence we will make every
effort to satisfy your needs.
Back to
Top
Q:
A: No! As long as your customers are credit worthy and
have shown a good payment history.
Back to
Top
Q:
A: With permission of the court we will consider
funding a bankrupt company.
Back to
Top
Q:
A: The factoring company! When they purchase your
invoice, your customer will be notified that the
payment should be sent directly to a (lock box) in your
name. The customer will never know the collection has
been sold.
Back to
Top
Q:
A: Since factoring is now so common, almost all account
debtors will work with you. The negative connotation of
factoring is yesteryear.
Back to
Top
Q:
A: NO! You decide which invoices you need to sell to
manage your cash flow needs. However, there are monthly
minimum requirements, which vary from factor to
factor.
Back to
Top
Q:
A: Companies that find cash flow as a recurring problem
often can't afford to have cash tied up in receivables
30-45 days. They need the cash to meet immediate
present financial demands of their business.
Back to
Top
Q:
A: You can terminate your factoring agreement with most
factoring companies at any time with a 45 day written
notice.
Back to
Top
Q:
A: One of the most frequently asked questions about
Factoring is the cost. Factoring generally cost
about the same as if you took credit cards or offered a
C.O.D. discount to you customers.
Back to
Top
