Frequently Asked Questions
How is accounts receivable funding different than a bank loan?
During the application and approval process, we focus on the creditworthiness of your customers, while banks focus on your company’s financial history and cash flow. Accounts receivable funding is not a loan; therefore no debt is entered on your company’s balance sheet. We can make a quick funding decision, while banks may take weeks-even months-to approve a loan.
How are the rates determined?
We take into consideration many variables, some of which include your sales volume, your customers’ credit strength, trends in customer payment cycles, invoice amounts, and the current climate of your industry.
How long does it take to receive the first funding?
Approval can happen in as quickly as 2 business days and funding as soon as a few hours after account set-up and invoices are received.
What information will you need to begin the factoring process?
Our one-page application, your company’s most recent accounts receivable and accounts payable aging reports, Articles of Incorporation or dba filing, and a sample invoice.
Will my customers know that I have factored their invoices?
Although factoring has become quite common and many customers have probably sent payment to factors before, we are virtually transparent. We understand that customers are the most valuable key to business. We intend for you to maintain your customer relationships, so the way we communicate with them is respectfully designed to protect your good will.
Here is how this process works:
- First, you send your invoice directly to your customer, just as you do now.
- You also send a copy of that invoice to us.
- Then, a letter introducing us to your customers is sent on your letterhead.
- As your new Accounts Receivable Management Company, we confirm the invoice with your customer on your behalf.
- Your customer will be asked to send your check to a remittance address, which is our bank lockbox.
How can I be certain that your company will treat my customers well?
The last thing we want is for you to lose a customer. We are not a collection agency, so we will never harass your customers. Maintaining your customer relationships is of utmost importance to us. We only succeed if you succeed.
What if my customer doesn’t pay their invoice?
If an invoice is unpaid beyond 90 days, you have a few options. You can choose to swap out that invoice in exchange for a new one or you can simply buy it back.
What if a lender already has rights to my accounts receivable as collateral?
We have many years of experience working with other financial institutions. Since we must hold the rights to the asset we are purchasing, we are usually able to arrange a subordination agreement or negotiate the release of any liens that may be encumbering your receivables.
I’m a new business with little or no credit history. Can I still qualify?
Since it is your customer who pays us, we concentrate more on their creditworthiness. We have helped many companies in their early stages grow into profitable entities.
Can I qualify if I have tax issues?
In most cases, yes, depending upon the lien amount in relation to your monthly volume and the details of the workout agreement you have with the government agency.