Insight

Insight2019-05-02T18:13:44+00:00

Here Is Some Information And Answers To Frequently Asked Questions About Factoring

How to get started?2019-05-02T18:05:57+00:00

The very first action would be to apply. Once we receive your application and the accompanying documentation, we will perform the due diligence necessary for approving your company. Once approved, we will set you up in our system and you’re all set to go. You can then fax or email invoices, rate confirmations, bills of lading, and proof of delivery to our office. Upon receipt and verification, we will advance the agreed upon percentage to you via Wire, ACH, or Fuel Card. We’ll then forward a Notice of Assignment to your customer on your behalf. After the invoice is paid, we deduct a small fee and release any remaining amount to you. It’s that simple. As a convenience, our Client Web module is online and available to you 24/7, with details on your account activity.

How long does the setup take?2019-05-02T18:05:57+00:00

We like to do things right, so we take up to 24 hours to get you set up, once we’ve received all the necessary information from you.

From our experience, we’ve learned that what’s most important to you, in the long run, is not the fast step up, but the fast funding — of the correct amounts, when and how you need it. We do our best to get you set up quickly, but since we also depend on you providing us the requested information, we’ll work to get it done in as quickly as 24 hours from pre-approval.

Click on the “CONTACT” button above to begin the application process. Once approved and set up, in cases where you have invoices that have already been sent to your customers, it’s likely we can get you funded on those too, given the timely receipt of the required information from your clients.

What other services can you help me with?2019-05-02T18:05:57+00:00

As you know, running a small business takes a lot of work. Although our focus is Factoring, we also offer Purchase Order Financing and Debt Consolidation as part of a factoring or P.O. financing facility set-up. The reason for these other services is that unlike some other companies, we are focused on helping small company owners grow their business, because your success is our success.

What will my customers think?2019-05-02T18:05:57+00:00

Factoring is widespread in many industries including Staffing, Construction, and Transportation, and many Customers including Shippers and Brokers actually prefer dealing with Factors for accounts receivables management. To them, it shows you take your invoicing seriously and see the value of putting accounts receivables management with us, allowing you to focus on what you do best – driving and delivering.

Long-term contracts and penalties?2019-05-02T18:05:57+00:00

Contracts spell out the rules of the game for both sides, but ours are clear and have no cancellation fees or penalties. We just ask that you give us 30-days written the notice, so we can manage collections and releases. We are committed to a simple and transparent rate structure, designed not to gouge you but instead, help you keep more of your hard-earned money. If for whatever reason we don’t meet your service expectations, then we don’t want to stand in your way to find a service provider who does.

What if I have bad credit?2019-05-02T18:05:57+00:00

You, or your company, may have a blemish on your credit record, and we understand that. What makes factoring special is that credit analysis is based on the quality of your clients, and not entirely on you. We look at the creditworthiness of your end Customer, Shipper, or Broker, to see whether we’re in a position to advance you on the invoices your deliver to them. By working with solid, established customers and factoring their invoices, you can quickly recover any blemishes to your credit record, while at the same time, successfully growing your business by using factoring.

Recourse or Non-recourse factoring? What’s the difference?2019-05-02T18:05:57+00:00

There is a difference, and it is significant. It’s important to us that you understand the difference, so here’s an explanation of the most important points.

Non-recourse factoring:

Non-recourse Factoring allows a Client to sell its invoices to a factor without the obligation of absorbing any unpaid invoices. Instead using Trucking as an example,  if a Broker or Shipper renege on their payments or pay their invoices late, any losses are absorbed by the Factor, leaving the Client’s business untouched. However, credit checks are diligently performed on potential Non-recourse clients.

Recourse factoring:

In Recourse factoring, the Client will be charged back the bought invoices if they go unpaid or uncollected. Since the carrier is agreeing to absorb some of the risk involved in the transactions involving its own customers, this factoring plan is generally less costly than Non-recourse factoring.

Recourse factoring has a few more differences in that it requires a certain minimum monthly balance, and also the factor will maintain a Reserve (typically, 5% to 20%) as security. In exchange, Recourse factoring will be slightly less expensive than Non-recourse factoring because there is a more even sharing of the risk. As a rule, potential Clients need to be more established.

How much does it cost?2019-05-02T18:05:57+00:00

This is something we are asked all the time. There’s a misconception that factoring is a costly option compared to bank financing when actually, a business will as a rule pay only a few pennies for each dollar factored. For instance, a $1,000 receipt will probably cost you between $25-40 in factoring fees. Most factors will also deal with the collections on the account, sparing a business the cost of another staff person or the owner’s time to handle the collections. That said, it’s imperative to work with a factor who states clearly the costs and services to be performed so that there are no unpleasant surprises.

What’s the difference between a bank line and factoring?2019-05-02T18:05:57+00:00

With traditional bank financing, rates tend to be slightly lower, however, the approval criteria along with other restrictions, have grown recently, making it much more difficult to obtain, especially for small businesses and start-ups. When banks provide a line of credit, this is a debt which will show up on your profit & loss and company balance sheet and be tied to some form of collateral of yours or the company’s, creating further restrictions.

Factoring, on the other hand, is not debt and is used only when you want to use it. It grows as your company grows, and is there for as long as you need it, without requiring you to take on more debt if you need more money since it involves advancing against your own, earned invoices.

What if I’m a new company?2019-05-02T18:05:57+00:00

No problem! We love new companies. Every big company today, was at one time, a new, smaller company. Unlike banks, factors generally don’t call for very much history of a company since we rely on the creditworthiness of your customers. This allows you to get going almost immediately, and focus on what you do best – grow your business. With years of factoring experience and working with small companies, we’re in a position to help you along with other services, to ensure you get the results you deserve.