A form of asset or inventory based financing that is based on collecting what you are already owed (accounts receivable). This is used to collect after the sale vs before it.
It is also a smart strategy to use for financing when unable to obtain a conventional loan because the financing is provided using the creditworthiness of your receivable accounts instead.
When to use
You have moved into wholesaling/distributing/private labelling
You have already fulfilled an order to your stockists but do not want to lose time waiting for them to pay
You have profitable ways to redeploy the payment into other deals
You need to turnaround and cycle the money back into production for further profits
You are unable to obtain a conventional loan because you haven't been paid yet.
OUR FACTORING PROGRAM
Lending against accounts receivable for cash flow acceleration
Collections of accounts receivable
Credit analysis of customers to help you make more informed decisions
Credit protection to prevent losses due to insolvent or bankrupt customers
Accounts receivable management, reporting and bookkeeping
Example in Action
Let’s say you have just created a new brand which in addition to e-com and direct sales, you fulfilled a preliminary order from Target who have issued an initial $100,000 order (receivables) but as part of their terms they will not pay for 60 days or until they have sold out the initial shipment and collected payment.
We can loan against these receivables as soon as they are created to provide you with up to 80% of their value ($80,000)—speeding up your cash flow and enhancing the ability of your business to grow. You get the balance of the invoice amount when your customers pay us, so you incur no long-term debt.
There are banks that may lend against your accounts receivable, but they do not provide the additional services included without additional cost through our factoring program.
In a nutshell, when you engage us to be your factor, we actually become your accounts receivable department. We handle collections, and provide you with the ability to see and manage all your receivables online. We’ll modernize your accounts receivable and serve as your credit department, performing unlimited credit checks as needed.
As an added bonus, we insure your eligible receivables—so you can sleep easy knowing that your customers’ ability to pay will not affect your ability to collect those payments.