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Factoring Frequently Asked Questions
Unfortunately, many business men and women don't fully appreciate all the benefits of factoring. These FAQ's will help explain how many businesses use factoring to their advantage. |
- Is Factoring a loan?
No. Factoring is a discounted purchase. Because factoring is not a loan, many businesses that do not qualify for bank financing due to insufficient collateral are able to get the operating cash they need through factoring.
- Does Factoring depend on my business’s financial strength?
No. Factoring only considers the credit-worthiness of the business’s customer.
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- Is Factoring expensive?
Yes, compared to traditional bank financing. The goal of factoring is to help the business grow, or in some cases survive, to the point of being able to qualify for lower priced bank financing.
- Besides getting invoices paid faster, does Factoring provide any other benefits?
Yes. Factoring provides a valuable credit screening services of potential customers, and is free of any lengthy application processes. It also frees you from having to offer cash or early payment discounts to your customers, while at the same time turning your business into a cash-on-delivery operation. See Factoring Benefits for more benefits.
- Do all invoices need be factored?
No. The client decides which customers to offer for factoring. The factor then determines which ones are acceptable. Once accepted, the factor will generally require that all invoices due from any particular customer be factored, otherwise the customer’s accounts payable department is likely to get confused on where to send payments. But not all invoices need to be sold to the factor, thereby avoiding those fees.
- What are the basic requirements of a client?
That one be honest, reasonably accurate in their paper work, do business with credit worthy customers, and be in a position to improve profitability by expanding sales or reducing expenses through the help of factoring.
- How often do clients submit invoices for factoring?
As often as they desire ... from daily to monthly.
- When are invoices submitted for factoring eligible for funding?
Normally, within 24 hours of our receipt.
- How much per month do your clients factor?
As low as $10,000 and as much as $4,000,000 with the average client being approximately $250,000.
- How do you transfer money to clients?
By wire transfer, ACH, overnight delivery, mail, direct deposit, local courier, or client pick-up.
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