Somewhere between venture capital and commercial lending institutions lie a variety of non-traditional solutions that can provide the working capital necessary to bring the vision for your business into reality without increasing debt or diluting equity.
Today, in this tough economy, business is a balancing act. With some customers taking 60, 90 or even 120 days to pay your invoice, imagine if you had the cash now generated by your receivables or purchase orders — what you could do with it! Would you negotiate better vendor discounts, raise your prices or, increase your credit lines to fund new growth for your business? If this sounds appealing, you should be serious about considering all available options that would provide the necessary working capital to fuel these new avenues for your business.
As a venture capital and funding resource company with strong strategic partnerships worldwide, we can offer a multitude of funding and cash flow solutions specifically designed to provide the ultimate in financial flexibility for small, medium and emerging companies. A variety of plans are available to serve your business needs no matter where you are in the business life cycle.
If your company performs business-to-business (B2B) transactions that generate at least $25,000 per month in revenue, you are a great candidate for a variety of cash flow solutions. To assist new ventures with this process, there are a number of financial products available including discount factoring, vendor pay assistance and complete back office administrative services. Some of the most widely used are:
For many companies, cash flow remains their greatest challenge. Factoring has become increasingly popular as it continues to be more difficult to obtain traditional financing. Although factoring is not as well known as debt or equity financing, it's often much more effective as a business financing tool. Factoring programs can be one of the easiest ways to improve cash flow while providing the necessary credit to companies that may not otherwise qualify for traditional bank lines of credit requiring additional collateral, adding debt to your balance sheet plus the monthly payments on a loan.
With the stress of short-term cash flow and financial obstacles removed, owners can focus on their primary business — and not waste time being an accountant, credit reviewer or collector. These benefits will almost always offset the fees paid to the factoring company.
There are two key benefits to factoring:
Drastically improved cash flow — Instead of waiting to receive payment, your business gets most of the accounts receivable when the invoice is generated. This reduction in the receivables lag time can mean the difference between success and failure for some companies operating on long cash flow cycles.
No more credit analysis, risk or collections — The factoring company performs credit checks on your customers and analyzes credit reports to uncover bad risks and set appropriate credit limits — essentially becoming your full-time credit manager. They also perform all the services of a full-fledged accounts receivable (A/R) department whether through e-invoicing, or paper billing including folding, stuffing, and mailing. All invoices and payments are then documented into an e-ledgering system available on a secure web site for your review 24/7.
The various factoring programs provide both recourse and non-recourse factoring. Under the non-recourse programs, the factoring company assumes the credit risk on all approved customers. These programs offer:
Accounts Receivable Financing: Rather than spending valuable time collecting on your receivables, imagine receiving a check almost immediately. The time saved by your accounting staff and the available options you would have with immediate access to these funds cannot be over emphasized. In tough economic times, when some of your customers may take up to 60, 90 or even 120 days to pay you, this could mean the difference between being able to meet your financial obligations or spending sleepless nights worrying about cash flow.
PrimeLine®: This program targets companies whose volume, operating performance and balance sheet strength qualifies them for the most competitive pricing structure. In contrast to the traditional factoring programs, PrimeLine® offers a rate structure that is comparable to that of major bank-owned-factoring. Under these traditional programs, all fees are grouped together into one discount rate or factoring commission. The factoring group offers this PrimeLine® program to only the most creditworthy of clients, many of whom may soon move to a major factor or qualify for a traditional bank line of credit.
Non-Notification: In addition to traditional factoring programs, a non-notification private label account receivable management line of credit might work best for you. Through this program, you can finance your receivables without notifying the customer. This service is typically designed for those businesses who maintain a more stable balance sheet and are in an industry that does not traditionally utilize factoring. Your invoices are not marked with the factoring company's remittance notice. Although the factoring group will also handle the collection of your invoices, these calls will be made in your company's name.
Purchase Order (P/O) Financing: This option can be utilized when a company does not have sufficient capital to produce or deliver an order. This situation can occur with a start-up, during an expansion phase, or because a company receives an unusually large order.
There are two options available for assistance in this situation: First, an option to provide your supplier with a Vendor Assurance Letter. This letter guarantees the supplier that all funds owed for the raw materials and production will be deducted from your account upon shipment of the product. Then, a check will be mailed directly to the supplier. As a second option, we have affiliated services through our strategic partner who specializes solely in P/O finance. Working with your purchase order, a letter of credit (L/C) can be established for the supplier that guarantees payment upon delivery of the product.
Transportation Financing: Added in 1986, this service specializes in serving the needs of the trucking industry. Currently, with more than 400 active clients, our financial partner is one of the few funding sources in the U.S. that can offer non-recourse factoring to the trucking industry. These programs can also be tailored to meet the needs of brokers and freight forwarders. In addition to the services offered by standard factoring programs, it provides trucking clients:
As a result of deregulation, trucking has evolved into one of the country's most competitive industries. Yet, between the heavy capital requirements for equipment and maintenance, coupled with the daily cash drains of fuel and payroll, many trucking companies find it difficult to finance new growth. Through this program, you can successfully receive the working capital necessary to meet current obligations while at the same time being able to aggressively pursue additional business.
As a specialist in this industry, our financial partners can provide many important advantages. Utilizing direct links to the numerous national credit reporting agencies, as a new customer, you can be quickly approved. And, this kind of collection expertise often reduces your A/R turn by several days with the non-recourse credit guarantee virtually eliminating bad debt. Perhaps most importantly, you are provided the vital working capital needed to keep your trucks on the road - easily and quickly!
Administrative Benefits — Lowering Your Business Costs
Every hour spent performing the mundane tasks that do not relate to increased sales and revenue costs a company real dollars. Outsourcing your credit approvals, along with collection and receivables functions allows both management and staff more time to focus on sales, production and customer satisfaction.
With advanced credit checks performed by the factoring company on all new customers, your cash flow actually improves because you can elect to provide your products or services only to creditworthy customers, thereby bringing down the possibility of future bad debts.
Your company is also distanced from the negative aspects of receivables collection and its sometimes unwanted litigation. You would also recognize additional cost savings on postage, long distance, credit investigation, and bad debt collections with all the associated fees and costs eliminated.
As experts in account receivable management, our factoring partners can be even more efficient than your own staff at managing receivables and improving customer payments. Plus, with 24/7 online accounts receivable management, you can review your A/R activity from anywhere, at any time.
Therefore, while improving your company's cash flow, you receive the additional benefit of outsourcing time consuming administrative and work intensive functions including:
At the very least, factoring can be a viable interim source of financing to help companies through a cash flow lag whether due to fast growth, expansion, or simply gaps in the cash flow cycle where working capital is scarce.
The average business factors for about 18 months, which is the time it usually takes to achieve growth objectives, pay off any past-due accounts and strengthen the balance sheet. At that point, your business will likely be in a better position to search for debt and equity opportunities.
With over 30 years experience in the financial industry and over $600 million in annual financing volume, our nationwide strategic partner utilizes the latest in high tech reporting coupled with a customized approach to successfully satisfy your cash flow needs.
Companies with annual sales of $250,000 to $25,000,000 are typically accepted in all commercial industries with a minimum of $25,000 in monthly sales volume required.
Still have questions? Click on Factoring FAQs link to find the answers to additional questions you may have. Then, contact us today to discuss the details of your business needs, and let our professional staff walk you through the process to help assure your continued success. Upon your interest to apply for a customized factoring program, a dedicated advisor will work with you to ensure your success.
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If you are ready to apply for business financing now, call us today to discuss the details of your business needs, and let our professional staff walk you through the process to help ensure your continued success. The application process is simple, and approval can be made quickly. Checks are typically issued within 24 hours of factoring your receivables.
We look forward to working with you to help improve your business profile.
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