BENEFITS OF A/R FACTORING
Manage Customer Credit
As a factoring customer of ours, you’ll have access to over 30 years of unmatched credit expertise — at no cost to you. We’ll investigate the creditworthiness of your key customers and prospects and then we’ll monitor that credit, track pay trends, and maintain individual credit limits for all of your important customers.
Avoid Bad Debt
When you factor your accounts receivable, the factoring company evaluates the creditworthiness of your customers and establishes credit limits for those customers. A factor will typically not allow exposures above those credit limits and will re-evaluate credit limits frequently. This imparts a level of discipline that helps your company avoid bad debt losses. For over 30 years, we have helped thousands of customers avoid write-offs and bad debt losses. And with aggregate historic bad debt losses of less than 0.07%, we’ve got the results to prove it.
Catch Up with Vendors
You may be like many of today’s companies that are struggling to keep current with suppliers and vendors. Vendors are far more accommodating to you if they are paid on a timely basis. Factoring your accounts receivable (“A/R”) helps you unlock the cash trapped in those accounts receivable…ensuring that late payments never interfere with your ability to service your customers.
As a factoring client of ours, you’ll have unlimited access to a full staff of courteous and professional collection experts — all at no cost to you.
The Power of Outsourcing
Outsourcing your accounts receivable (“A/R”) management to us is just plain smart. We are equipped to handle both of these business-critical needs, without burdening your existing staff, or your pocketbook!
Pay Taxes on Time
Factoring your accounts receivable can improve your cash flow and allow you stay current with your regular payroll tax deposits. A/R Factoring can also be an attractive alternative to dipping into personal or business savings.
Avoid Bounced Checks and NSF Fees
How much do you pay your bank each month for insufficient funds charges? When you do the math, NSF fees are a real killer for a business’s profitability. There’s a much cheaper, and more reliable, option for accessing additional cash quickly when you need it.
A/R Factoring gets you immediate cash so you can cover payroll, vendor payments and other time-sensitive needs.
If you collect your receivables from your customers in 50 days, but you pay your employees weekly, you’ll need enough cash on hand to cover 7 payrolls out of pocket before having any cash inflow. As a business owner, you know if you can’t meet your payroll, you can’t stay in business. Instead of using last month’s collected sales to cover today’s payroll, factoring allows you to use today’s accounts receivable to cover today’s payroll.
Re-balance Working Capital
Tie Short-Term Assets to Short-Term Debt: Just ask your accountant — borrowing long term to finance your short-term cash flow needs is a bad idea. Longer term debt, like fully-amortizing term loans, is designed to finance longer term assets such as real estate and equipment. Shorter term assets, such as accounts receivable and inventory require short term financing — like factoring. Unlike a term loan, factoring adds no debt to your balance sheet — you’re simply swapping one asset (accounts receivable) for another (cash). And that keeps your debt-to-equity ratios (i.e. financial leverage) low.
A/R Factoring credit lines have higher advance rates than bank loans, yielding more availability and allowing faster access to funds. When traditional bank financing is no longer an option, a factoring line of credit can retire the old debt and, often, allow for additional working capital as well. Unlike traditional bank loans, factoring is not a loan and therefore does not add debt to a company’s balance sheet.
SUMMARY OF BENEFITS FOR YOUR BUSINESS
- Award-winning customer service and state-of-the-art systems and reporting
- Cash flow injection, allowing borrowers to:
- Fund growth and additional sales
- Catch up on past due payables
- Refinance bank line of credit
- Fund other working capital needs
- Professional comprehensive A/R management services:
- Credit reviews and credit limits for existing and prospective customers
- Credit protection from bad debt losses
- Collection assistance