We specialize in
Factoring
Definition: Factoring is a short-term financing solution that supplies cash to a business while it waits for clients to pay outstanding accounts. While offering extended payment terms can improve business-to-client relationships, it can also put the business in a financial bind. During the waiting period, expenses can pile up and new orders may be put on hold. Factoring allows a business to sell its outstanding invoices, purchase orders, and contracts so it can get production flowing again faster.
Overview
Factoring offers several different routes to fash cash to cover the interim between delivery and payment. Three parties take part in the factoring process: the financing firm (called a “factor”), the business, and the business’s client. The business sells its outstanding accounts to a factor for a portion of their value (normally around 80%). The factor gives the business cash and collects repayment from the client. Any excess goes back to the business, minus the factoring fee.
When a purchase order comes in, but the business doesn’t have enough materials on hand to complete the order, complications arise. But, with a factoring loan, the business can get cash upfront, order materials, complete the order, and then repay the loan when the client pays.
Even after goods and services have been delivered, there can be a waiting period before payment for them brings in capital. Instead of waiting for customers to pay before satisfying orders from the next client, businesses can leverage their outstanding invoices to get advanced cash.
Factoring is used only for business-to-business transactions and not for retail or business-to-consumer situations. Factoring is not considered a “loan,” but rather the sale of an asset – in this case, the invoice. Recourse and non-recourse factoring differ in the way funds are recovered if a client fails to settle their account.
Loan Highlights
– Factoring terms and qualifications vary depending on the type of financing.
– Most factors examine the credit history of a business’s clients more closely than the business’s.
– Purchase orders, accounts receivable, and contract financing are all forms of factoring.
– Recourse factoring means that if a client fails to pay their invoice, the factor can collect payment from the business.
– No-recourse factoring limits the selling business’s liability for the account.
Make Your Move
↓ Let’s review your accounts receivable to see what accounts make sense to factor
↓ We will shop the market to see what advances are available
↓ We’ll also help you assess your financing picture to identify options based on your goals
↓ We will be your funding advocate from start to finish.
Contact JBartolo Today To Get Started!
Why leave your brand to chance? You’re already busy running your operations. Let our team position your business for the right financing solutions. You’re already doing what you love. Let us do what we love and shape your financing to support growth.