| We are a nationwide company offering invoice factoring programs the others can't because of our unique funding capabilities. The others are restricted by their banks on what kind of factoring programs they can offer. We are not restricted More Factoring Financing Information
The difference between factoring financing and other sources of financing is that factoring financing company actually purchases and tracks commercial invoices. In addition to providing immediate cash on invoices, the factoring financing company performs valuable credit analysis on new and existing customers and conducts professional, routine follow up on invoices as they become due.
For these invoice factoring financing receivable services, the factoring financing receivable company charges a management fee, exactly as would the real estate manager in our example, and interest is charged on the funds advanced. The total cost of the service is, of course, the sum of the two items, but combining the business factoring financing receivable management expense with the interest on the money would be like adding your home repair, gardener, pool maintenance, and all other property upkeep to your mortgage bill and calling it interest
Historically, the bulk of account receivable factoring financing was predominately in the textile, furniture and apparel industries. Today, factoring financing firms are working with all types of industries, including: manufacturers, service providers, transportation companies and high technology firms.As growing firms continue to prosper, suppliers and contractors are looking for additional sources of working capital to accommodate increased sales volume.
The overall increase in factoring financing volume is mainly attributed to the credit crunch in the late 80s. As the availability of bank commercial credit tightens, more businesses look towards alternative sources of financing to achieve growth. Compare factoring financing to the following real estate example. Assume that the client owns a strip mall, a dozen or so shops in a small shopping center, and goes to the bank for a $2,000,000 mortgage on the property. The bank looks at the financial statement of the mall and sets a mortgage based on the property’s income stream, real estate location, and other considerations regarding the property’s general condition. Then the bank reviews the location’s factoring financing information and finds that the tenant files are in poor order, credit checks on the tenants are mostly missing, and postings to the rent roster are late and frequently inaccurate
Setting
up a factoring financing relationship is quick and easy in comparison to other forms of
financing. Applications simply call for
basic company information and a customer list.
Years of profitability are not required which makes factoring financing an option
for startups generating receivables. It
is possible that factoring financing funding can occur in as little as a couple of days after the
receipt of the application and invoices.
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