Accounts Receivable Factoring - Receivable Financing

What is accounts receivable financing?

Accounts receivable financing is simply the selling of an invoice that is due to be paid in the future for immediate cash. In other words, instead of waiting 30 days or longer to receive payment a business can receive cash within 24 hours of invoicing their customer. It is commonly known as “factoring”.

What is purchase order funding?

Purchase order funding is simply the advancing of cash to a business that has purchase orders from creditworthy customers. Often, businesses are forced to turn down larger orders because they don't have the cash needed to complete the order. Purchase order funding solves these issues.

Does Your Business Need To Raise Cash?

Accounts receivable financing or factoring is an unlimited line of credit for business-to-business companies based upon the creditworthiness of their customers. This method of finance does not require you to pledge any personal or business assets as collateral, and you do not need an audited financial statement to qualify. This unique program will greatly improve the cash flow needs of your business and provide the means for your business to thrive and grow while not incurring additional debt in the process. Having available cash will provide the resources for the business to expand, increase production, take on new business, stabilize cash flow and meet payroll expenses.

Many times business’s that have experienced or are currently experiencing financial hardship will qualify for accounts receivable financing or factoring because the underwriting requirements are less stringent than traditional bank financing. The emphasis is placed on the credit worthiness of the business’s customers. Accounts receivable factoring can be very cost-effective, which in turn can make this an excellent alternative working capital strategy. This cash flow tool can be used exclusively or can be used to complement any credit arrangements a business may already have available, such as with banks.

Is this program a loan?

No, participation in this program does not add to a greater business debt. Your accounts receivable is a business asset. Accounts receivable financing or factoring is the selling of this outstanding business asset at a discount for immediate cash. The underwriting requirements for accounts receivable financing or factoring are less stringent than that of typical bank financing and your personal assets are not required to be pledged as a guarantee or security for the transaction. Many times a business will use this program to supplement credit arrangements they have already established.

How does the program work?

Once you are approved and an account is set up, you will be able to sell the receivables that you select to obtain the cash that you need. Initially, the funding source will advance you a predetermined amount, typically this will run 60% to 90% of the face value of the invoice that you are selling. Upon full payment of the invoice by your customer the remaining balance due, less the funding fee, will be paid to you. You are not required to sell all of your receivables, only those receivables you choose in order to meet your cash flow requirements.

What do the fees typically run?

The fees are determined on a case-by-case basis and are based upon an evaluation of several factors that include type of business, dollar amount of receivables to be sold, the quantity and quality of receivables to be sold, typical time of payment on your receivables and frequency of anticipated need for future accounts receivable financing or factoring . Typically, this amount runs from 2.5% to 7% of the face value of the invoice being sold. Two key factors in determining the funding rate are the number of days that your customers take to pay their invoices and their credit worthiness. Keep in mind that extending credit to slow paying customers costs you money.

How do I apply for this program?

The whole process is rather simple. First you need to complete our Financing Worksheet to provide us with some basic information about your business and your funding needs. We will then review your information and you will be contacted as to whether you qualify for the program and provided additional program information. If you decide to proceed, you will then be required to complete an application and provide a list of your customers for the invoices that you intend to sell.

What if there is bankruptcy, a tax lien or poor personal credit issues?

All businesses eventually meet with financial set-backs. Larger and financially secure companies can rely on credit lines and bank loans during hard times or slow cash flow periods. Not all businesses qualify for these types of services. We can in most cases help clients who have experienced or are currently experiencing financial hardship. The underwriting requirements for accounts receivable financing or factoring are less stringent than traditional bank financing. In accounts receivable factoring the emphasis is placed on the credit worthiness of your customers.

How long does the process take?

Once due diligence is completed and you are approved, upon the exchange of final documentation you will be able to begin the process of selling your invoices for immediate cash. This length of time depends on the type of business, however providing there are no unforeseen complications, typically you can start selling your invoices within 5 -10 business days upon approval of your completed application and supporting documents. To obtain further information about how this unique program can work for your business Click Here and we will be happy to help you.

Thomson Capital Group, Box 655, Doylestown, PA 18901 Phone: 215-489-9232 E-mail: info@thomsoncapitalgroup.com

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