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
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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.
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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.
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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 )
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Q:
A: Fast! Once approved, most factors pay within 24 to 48 hours of
receipt of the invoice.
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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.
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Q:
A: No! As long as your customers are credit worthy and have shown a
good payment history.
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Q:
A: With permission of the court we will consider funding a bankrupt
company.
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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.
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Q:
A: Since factoring is now so common, almost all account debtors
will work with you. The negative connotation of factoring is
yesteryear.
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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.
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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.
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Q:
A: You can terminate your factoring agreement with most factoring
companies at any time with a 45 day written notice.
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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.
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