![]() 10+ years of relevant finance experience within a multi-national corporation.FMP/EFLP graduate and/or MBA experience.University degree or equivalent in finance and accounting.No credit services provided, which means you manage your own credit policy. Some factors provide credit reports and other information on your existing and potential customers. Your annual percentage rate is locked long-term, or for the life of the loan. Rates can be adjusted as you finance more money through factoring. No accounts receivable or back office services are provided. Some factors handle collections of your accounts receivable and provide additional back-office services. Minimal paperwork and documentation are required to start factoring.Įxtensive paperwork, financial statements and personal information are required. Once your loan is approved, you have immediate access to those funds. ![]() Securing a loan or line of credit takes between one and two months. It can take less than five days to set up an account. Qualifying for a loan requires a review of your company’s financials, assets and liabilities, and credit history. You can qualify for factoring regardless of your credit score most factors are more concerned with your customers’ credit strength. You repay principal and interest on your loan. The money you borrow comes with a cap or a limit.įactoring is not a loan. The amount of money you can finance grows as your receivables grow. Factoring versus a Traditional Bank Loanįactoring differs from a bank business loan or line of credit in many ways: For more information, see our article on the difference between recourse and non-recourse factoring. Some factoring companies offer both recourse and non-recourse options. There are usually stipulations tied to non-recourse factoring, which typically has a highter factoring rate, so make sure you understand exactly what the non-recourse terms are before choosing this option. Non-recourse factoring means the factoring company assumes the majority of the credit risk for collecting on an invoice. The two main types of factoring are recourse and non-recourse. Recourse factoring means the factoring customer will ultimately take responsibility for the payment of an invoice if the factoring company cannot collect payment from the debtor (the customer's client). Make sure the factor you work with is upfront about the fees they charge. When choosing a factoring company, pay close attention to the fee structure. Some factoring providers have additional fees that cover money transfers, collateral and other operational costs. Some only charge an overall factoring fee that is determined by the monthly volume of submitted invoices and the creditworthiness of a customer's clients. Different factors have different fee structures. The factoring company makes money on the factoring fees for each invoice. Many companies use the cash generated from factoring to pay for inventory, buy new equipment, add employees, expand operations or any expenses related to operating the business. Factoring is commonly used across multiple industries - trucking, transportation, manufacturing, government contracting, textiles, oilfield services, health care, staffing and more. Scalable - the amount of funding available grows with your companyĬontact Us About Factoring Services Which Companies Use Factoring?Ĭompanies of all sizes, from single-person businesses to Fortune 500 corporations, use factoring as a way to build cash flow.No debt incured (unlike traditional loans).Customized and managed to provide capital when your company needs it.Based on the quality of your customers’ credit, not your own credit or business history.Free back-office support, including managing your collections.The factoring company pays you the rest of your invoice amount, minus a small fee.The factoring company collects full payment from your customer.You receive a cash advance on your invoice from the factoring company, typically within 24 hours.You send your invoice to a factoring company.You perform a service for your customer.Factoring can be explained in five easy steps:
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