New to Factoring?

For those who aren't familiar with factoring, it is basically a fast way to get cash to run your business.

Factoring is Not a Loan

When you send your customers an invoice, they usually have 30 days to pay you back. Factoring companies will give you the bulk of the cash up front, sometimes within 24 hours, and collect the payments from your customers themselves. Once the invoices are paid in full, you’ll get the balance left over, minus a small fee.


Factoring Doesn't Require Debt

Sounds simple enough – fast cash for your business – no loans, no debt.

So how do you go about choosing the best factoring company?

Not all of them are created equal. Not all of them will give you the same level of service you need to help grow your business.

Everyone claims they have the simplest rate structure in the industry, no long-term contracts, same day funding, no up-front fees, no monthly minimums or maximums, etc., etc., etc.

We also offer these same benefits, but we GO THE EXTRA MILE FOR YOU that other factoring companies don’t.

Here’s Why We Are The Factoring Company You Need For Your Dayton Business

No other factoring company matches our level of superior service and offerings.


As you can see, we simply have more to offer you.

Other factoring companies don’t even compare.
Dayton

And Not All Factoring Companies Can Say This:

More than half of our new business comes through client referrals.

Some of the benefits you receive with factoring are:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Information for the city of Dayton

Dayton is the sixth largest city in the state of Ohio and is the county seat of Montgomery County. In the 2010 census, the population was 141,527; the Dayton metropolitan area had 841,502 residents, making it the fourth largest metropolitan area in Ohio, after only the urban agglomerations of Cleveland, Cincinnati and Columbus, and the 63rd largest in the United States. The Dayton Springfield Greenville Combined Statistical Area had a population of 1,080,044 in 2010 and is the 43rd largest in the United States. Dayton is situated within the Miami Valley region of Ohio just north of the Cincinnati Northern Kentucky metropolitan area.Ohio's borders are within 500 miles (800 km) of roughly 60 percent of the country's population and manufacturing infrastructure, making the Dayton area a logistical centroid for manufacturers, suppliers, and shippers.

 

Dayton also plays host to significant research and development in fields like industrial, aeronautical, and astronautical engineering that have led to many technological innovations. Much of this innovation is due in part to Wright Patterson Air Force Base and its place within the community. With the decline of heavy manufacturing, Dayton's businesses have diversified into a service economy that includes insurance and legal sectors as well as healthcare and government sectors.Other than defense and aerospace, healthcare accounts for much of the Dayton area's economy. Hospitals in the Greater Dayton area have an estimated combined employment of nearly 32,000, a yearly economic impact of $6.8 billion.[10] It is estimated that Health Partners, a hospital network, contributes more than $2 billion a year to the region through operating, employment, and capital expenditures. In 2011, Dayton was rated the No. 3 city in the nation out of the top 50 cities in the United States by HealthGrades for excellence in health care.

 

Many hospitals in the Dayton area are consistently ranked by Forbes, U.S. News & World Report, and HealthGrades for clinical excellence.Dayton is also noted for its association with aviation; the city is home to the National Museum of the United States Air Force. Orville Wright, poet Paul Laurence Dunbar, and entrepreneur John H. Patterson were born in Dayton. Dayton is also known for its many patents, inventions, and inventors that have come from the area,[14] most notable being the Wright brothers' invention of powered flight.[15] In 2008, 2009, and 2010, Site Selection magazine ranked Dayton the No. 1 mid sized metropolitan area in the nation for economic development. Also in 2010, Dayton was named one of the best places in the United States for college graduates to find a job. Dayton's economy is relatively diversified and vital to the overall economy of the state of Ohio. In 2008 and 2009, Site Selection magazine ranked Dayton the No. 1 medium sized metropolitan area in the U.S. for economic development. Dayton is also among the top 100 metropolitan areas in both exports and export related jobs, ranked 16 and 14 respectively by the Brookings Institution. The 2010 report placed the value of exports at $4.7 billion and the number of export related jobs at 44,133.

 

] The Dayton Metropolitan Statistical Area ranks 4th in Ohio's Gross Domestic Product with a 2008 industry total of $33.78 billion. Additionally, Dayton ranks third among 11 major metropolitan areas in Ohio for exports to foreign countries.[62] The Dayton Development Coalition is attempting to leverage the regions large water capacity, estimated to be 1.5 trillion gallons of renewable water aquifers, to attract new businesses.[63][64] Moody's Investment Services revised Dayton's bond rating from A1 to the stronger rating of Aa2 as part of its global recalibration process. Standard & Poor's upgraded Dayton's rating from A+ to AA in the summer of 2009.

 

 

Information for the state of Ohio

Ohio is highly industrialized, yet it also continues to draw economic riches from the earth. Among national leaders in the production of lime, clays, and salt, it is a historic center of ceramic and glass industries. Ohio's soil supports rich farms, especially where it was improved ages ago by additions of glacier-ground limestone. Although most of the state's income is derived from commerce and manufacturing, Ohio also has extensive farmland, and large amounts of corn, soybeans, hay, wheat, cattle, hogs, and dairy items are produced, although the number of family farms is rapidly dwindling.

 

Railroads, canals, and highways crisscrossing the state have since the late 19th cent. provided the means for transporting large amounts of raw materials and manufactures. Lake Erie ports, chiefly Toledo and Cleveland, handle iron and copper ore, coal, oil, and finished materials (including steel and automobile parts). In spite of massive industrial decline since the 1960s, which has made Ohio the center of the "Rust Belt," the state retains many manufacturing centers, with an emphasis on heavy industry. Leading products include transportation equipment, primary and fabricated metals, and machinery.

 

Our quick and easy factoring service can increase your cash flow today!  

Why not start considering to use factoring businesses as a way to change your motive and give yourself a more comfortable future in the eyes of your staff and your bank balance? -Dayton Factoring Companies

 

 

YOUR CASH FLOW ADVENTURE BEGINS HERE  

Dayton Factoring Companies Articles

The Best Kept Secret in Financial Services: Freight Bill Factoring!

 

If you're an existing owner of a trucking business, or perhaps you're planning on starting a trucking business, then you may be interested in Freight Bill Factoring. Freight Bill Factoring helps trucking businesses, both large and small, achieve their overall business goals; but before making any final decision you must fully understand how Factoring works.

 

Freight Bill Factoring has become very popular with trucking businesses and is often referred to as the financial backbone of the trucking business. If you're not familiar with Freight Bill Factoring, you may not know that factoring is a financing alternative for business owners: it gives them immediate access to additional financing capital they may otherwise not have access to. The process of Freight Bill Factoring is actually quite easy: it involves a factoring company purchasing bill of ladings at a discounted rate. This process is a win-win situation for both the trucking company who receives immediate funds and for the broker who pays for the invoices.

 

Freight Bill Factoring Is Not New!

 

Freight bill factoring is not a new idea; in fact, it has a long, rich tradition. Most civilizations that have engaged in commerce have also engaged in factoring in one form or another. For example, business relationships during the colonial period in North America were required to make cash payments in advance against Accounts Receivable in order for the business to continue with its commercial operations, prior to their users being paid for their goods. So, they were engaged in factoring!

 

Factoring Specialists Have Many Services to Offer

 

Of course, factoring has become a lot more sophisticated over the years, and today it's focused on financial management, credit worthiness, and on collections. However, the basic concept of purchasing Accounts Receivable has stayed the same. In addition, the modern factoring company of today can do a lot more than just funding: a factoring specialist can assist clients by evaluating and setting credit limits, verifying customer's credit worthiness, and professionally managing Accounts Receivable collections. Right across North America we see factoring companies existing in all forms and serving business sectors and industries of all types; and today, many large financial institutions even have their own factoring divisions. Generally, though, factoring companies are smaller, independently owned enterprises.

 

Banks Step Out as Factoring Steps In

 

Factoring has become very popular with trucking businesses because, as most business owners can verify, commercial lenders have become increasingly inflexible, with stricter regulations and ever-changing lending criteria. This inflexibility has forced both small and medium sized businesses to search for alternative financing sources, and this is where factoring has stepped in. Factoring is a simple, workable, solution-based process, providing an alternative for trucking businesses when traditional means of financing are not available. Factoring is proving to be a great financial remedy, particularly as banks and other lenders are becoming less friendly to small business owners.

 

Factoring Companies Operate Worldwide

 

The volume of factoring around the world has today exceeded the trillion-dollar mark! Factoring companies operate on every continent and, in the last four years, worldwide factoring transactions have increased by 60%. And that's why we say that Freight Bill Factoring is the best kept secret in financial services!

 

 

Our quick and easy factoring service can increase your cash flow today!

 

 

Dayton Factoring Companies Articles

About Invoice Factoring and How to Choose the Best Invoice Factoring Company for Your Business

 

Most people have heard of invoice factoring, but knowing exactly how it works and how to choose the right factoring company for your business can be difficult to ascertain. We've put together this brief guide to help you understand invoice factoring and to provide you with enough information to help you make the right choice for your business.Most business-to-business (B2B)companies find it very frustrating when forced to wait for customers to pay their accounts. When payment terms are over-extended, businesses of all sizes can find themselves dealing with cash flow problems. For some customers it's industry standard to offer long payment terms, but there are other customers who demand longer payment terms simply because they can. This is where invoice factoring steps in to assist businesses.

 

So, how does invoice factoring work? Invoice factoring is a method of keeping a business's cash flow steady without the business being forced to take on debt or sell equity.

 

In this article we'll look at how the factoring process works, the benefits it offers to businesses, and we'll also determine which businesses qualify for factoring.

 

Explaining Invoice FactoringInvoice factoring is when Accounts Receivable are purchased at a discount price. Today, invoice factoring is one of the most popular financing methods, helping thousands of businesses grow and expand. In fact, you may be interested to know that the history of the United States began with invoice factoring! Apparently, the Pilgrims used invoice factors in London to finance their voyage to Plymouth on the Mayflower. And once colonies had been established, invoice factoring remained a popular financing method among New World traders and merchants. So, as you can see, business owners have been using invoice factoring for thousands of years. Today, Invoice factoring is still considered the safest way of obtaining the funds a business needs to grow and expand.

 

Basically, invoice factoring converts a business's current unpaid invoices into immediate cash; solving cash flow problems caused by net payment terms of 30, 60, and even 90 days. Without reliable cash flow a business will fail to thrive because inevitably it will fall behind on rent or payroll and miss out on great opportunities to expand the business. Invoice factoring allows management to concentrate on growth by eliminating the frustrations of unpaid accounts.

 

The process of invoice financing is the selling of Accounts Receivable to a reputable factoring company. Invoices, which could well be outstanding for up to 4 months, are purchased by the factoring company for up to 98% of their face value.

 

The three participants involved in a factoring transaction include -

 

-The business who issues the invoice;

 

-The customer, or account debtor, who owes payment on the invoice; and

 

-The financing company, or factor, who purchases the invoice and provides immediate cash.

 

I've Heard Invoice Factoring Called Other Things - What Is the Proper Terminology?

 

It's true, the term Invoice Factoring is used interchangeably with other terms like AR Factoring, Accounts Receivable Financing, Receivables Financing, Invoice Financing, AR Financing, and Receivables Factoring; so just keep in mind that all these terms refer to the same type of funding.

 

How Invoice Factoring Works

 

Once a customer receives a product or service from a business, they receive an invoice. With invoice factoring, the business can now "sell" this invoice to their chosen factoring company. In return, the business will receive a cash advance, somewhere between 70% and 90% of the value of the invoice. Now that the business has cash in-hand they're free to cover payroll and rent, take on new work, buy new equipment, invest in new technology, and even be on the receiving end of early-pay discounts from suppliers. Once the invoice has been paid to the factoring company the business will receive the remainder of the funds, less the agreed-upon factoring fee, which is typically based on the value and term of the invoice.

 

Invoice factoring results in a win-win-win situation for all three parties: the business concerned receives immediate cash on the invoice submitted, the customer enjoys favorable payment terms, and the invoice factoring company earns their fee.

 

Comparing Invoice Factoring with Traditional Bank Financing

 

The difference between invoice factoring and bank financing is that invoice factoring is not a debt, and it's this fact most businesses find appealing. As a business, you sell your Accounts Receivable to the factor and you receive a cash advance - that's all there is to it. It's up to you what you do with the funds because no debt means no restrictions.

 

An added benefit of invoice factoring is that it's the credit quality of the business's customers that are evaluated, which suits not-yet profitable or early-stage businesses selling to the government or established companies, yet still trying to establish themselves. The factoring rate businesses pay factoring companies is much more attractive than alternative financing arrangements that don't take into account the credit worthiness of a business's customers.

 

Other benefits of invoice factoring include a quick and simple application process, a higher approval rate when compared with banks and other forms of financing, and a quicker time to funding. When it comes to the size of funding, factoring companies are very comparable with banks in-so-much-as they can fund up to $10 million credit lines. The streamlined approach to invoice factoring provides businesses with much needed cash in-hand so the business can grow and prosper, meet all its financial obligations in a timely manner, still have cash to invest in up-to-date equipment, source new and bigger clients, and receive discounts for bulk buys or early payment.

 

Applying for Invoice Factoring is a Relatively Simple Process

 

Most businesses are familiar with the stress of applying for a bank loan, but applying for invoice factoring is a very simple process: it takes less paperwork and certainly much less time, and is not as stressful as trying to raise equity. Invoice factoring involves a very simple application process, eliminating the stress and unnecessary hurdles placed on small businesses trying to access finance.

 

Because invoice factoring provides quick access to funding, businesses find themselves in a position to take advantage of great opportunities, like expansion and accepting large orders. For many businesses who have been denied access to bank finance, being accepted for invoice factoring allows the business to continue growing and expanding. Once you've been accepted for invoice factoring, the factoring company is basically underwriting your customers to the same extent that they're underwriting your business. Of course, another bonus is that funds received from factoring your invoices can increase your available bank credit.

 

As your chosen factoring company, we're here to help collect on your receivables, but only if you ask us to. Following your direction, our account managers will politely but firmly chase up outstanding invoices. If your decision is that you prefer we don't speak with your customers under any circumstances, we accept that too. Invoice payments are directed to a specific account created under your company's name.

 

How Much Cash Will I Receive Immediately?

 

The amount of cash you'll receive immediately is an agreed-upon percentage of the face value of your invoices. Industry advance rates typically vary from between 70% and 90% of the face value of an invoice, which means that if you're owed $10,000, depending on the agreed-upon advance rate, you can expect to receive an immediate payment of between $7,000 and $9,000.

 

The remaining amount of between $1,000 and $3,000, less the factoring company's fee, will be forwarded to you once your customer has paid their invoice.

 

How Much Do Invoice Factoring Companies Charge?

 

Depending on the face value of the invoice, factoring fees typically range from between 1% and 5% per month; however, our own factoring fees range from between 1% and 3% per month. Transparency is vitally important when considering factoring fees, and businesses should be aware that invoice factoring companies who make it difficult to determine their all-inclusive fees are companies to be avoided at all cost. This lack of transparency is designed to confuse customers and they use this confusion to their advantage.

 

If you're unsure about the information you've received on invoice factoring you must proceed very cautiously, or alternatively, try a different factoring company. The information you receive must be clear and concise, leaving no room for doubt or confusion on your part. Another aspect of invoice factoring that you should be aware of is that there are invoice factoring companies out there who advertise rates of 1% (and even lower)which may sound very attractive; however, they make up for these low fees with a range of hidden charges.

 

One sneaky way these companies attract customers is to charge a low monthly factoring fee, but you'll be charged for two months if the invoice should go over by just one day.We charge invoice factoring fees on a daily basis, which means that however many days outstanding the invoice may be, this number of days will be used to calculate the fee chargeable. By this we mean that you won't be charged an extra month of fees simply because your invoice was outstanding for 31 days instead of 30.

 

Please Explain How Invoice Factoring Can Help Grow My Business

 

Today, businesses are choosing invoice factoring over merchant cash advances or bank term loans simply because it's the lowest risk option there is. The fact is, the sale has been completed and the invoice confirmed, so the only thing remaining is for the customer to pay the invoice. Provided you have confidence that your customer will pay your invoice in a timely manner there's nothing to worry about. However, with a bank loan, monthly interest payments can devastate small businesses, start-ups, and even large businesses. And, with bank loans, they either amortize or the total amount is due at the end of a specific period. This kind of debt stress can be devastating for business owners, who are often placed in the position of deciding whether to make bank interest payments, pay rent, or make payroll.

 

With invoice factoring, because you receive cash in-hand for your invoices, there's no stress, and you're free to grow your business in whatever way you see fit. For many businesses the only negative has always been waiting to receive payment on invoices, so now there'll be no more waiting and you'll have cash in-hand to meet your own financial obligations.

 

What Kind of Businesses Qualify for Invoice Factoring

 

Fortunately, it's actually quite easy to apply for and be approved for invoice factoring. With banks and other lenders, profitability, annual revenue, and credit scores can be obstacles to being approved for finance, but these factors typically don't apply with invoice factoring companies.

 

There are three things that invoice factoring companies are usually looking for -

 

-The business must have government or other business customers;

 

 

-Business invoices must be unpledged to other loans and be due and payable within 90 days. This means that you can't have another loan where you're claiming the same invoice as collateral; however, if you do have another loan it must be subordinated (rank after)the invoice factoring company's claim to your accounts receivable;-There should be no history of serious legal or tax issues connected to your business. Note that some factoring companies use a "time in business" or minimum credit score to approve or deny applications; however, we do not.

 

How Can I Choose the Right Invoice Factoring Company for My Business?

 

You've made the decision that invoice factoring may be a good fit for your business, so what should you do next? There are so many invoice factoring companies out there to choose from, so how do you determine which one is the right fit for you? The answer to this question is - very carefully! You need to know exactly what you're looking for. To start with, you're looking for an invoice factoring company that offers more than just funding. There are many factors out there claiming to be the most technologically advanced, the fastest, and the easiest to use, but be cautious. You need to receive good customer service from your factor and be very wary of high fees. Some factoring companies are forced to charge higher fees in order to cover the losses they experience because they underwrite poor quality clients.

 

Excellent Customer Service is a Must!

 

It's very important that a good working relationship be established between the invoice factoring company and the business because, without it, businesses can be left confused as to why their credit facility has been reduced or why certain invoices have been rejected. Great customer service and a personal touch is vitally important when it comes to invoice factoring. If your questions are not being answered in an honest and open fashion, or your calls and emails are not being responded to in a timely manner, then find another factoring company.

 

 

 

 

 

 

Dayton Factoring Companies Articles

Business Is Booming but Your Company's Cash Strapped!

 

A business needs good cash flow for many reasons, and many businesses have learned the hard way that business can be booming but they can still suffer from cash flow problems. There are many scenarios where a business might urgently require access to cash: it could be due to the sudden growth or expansion of a business, a major transaction may need to be expanded, perhaps there's a need to purchase equipment or even to employ more personnel.

 

Interestingly, research shows that many businesses (both small and medium-size) fail, not because business is bad, but because they experience difficulties when trying to meet short-term financial responsibilities. So how can a growing and profitable business get into serious financial trouble, or even go broke? It seems so contradictory, but on closer examination you'll see that it's not surprising at all.

 

Many Businesses Experience a Cash Flow Dilemma

 

It's so easy for a business to get into a situation where they have a cash flow problem: you only need one or two larger accounts to default on payment, or to take an additional 60 or 90 days to pay, and now you've got a cash flow problem!

 

Traditionally, business owners have depended on conventional lending sources for a business Line of Credit, and this often includes short-term Bridging Finance. But there are also many people in business who've used their personal credit cards for business-related expenses. Once business owners have exhausted traditional means of funding, the process of acquiring extended financing can become a time-consuming, trying, and often impossible task.

 

Factoring

 

Fortunately, today, we have a viable and effective alternative for business owners to get through cash strapped periods, particularly during periods of expansion and business growth. This innovative form of financing is known as Factoring; it's also sometimes referred to as Asset Based Lending or Accounts Receivable Financing.

 

Factoring has become a workable and realistic solution for many businesses, particularly when cash flow is uncertain and threatens the viability, or even survival, of the business.

 

How Does Factoring Work?

 

Basically, when a business has credit-worthy accounts receivables, the factoring process provides the business with an instant cash injection on those receivables. So, sometimes, when a lender says 'no' to a business, a factoring company may say 'yes', thus offering the much needed cash injection that so many businesses require to move forward.

 

Factoring companies understand the financial needs of their trucking clients and react very quickly to provide them with the professional, personalized, hands-on attention that they require. Freight Bill Factoring is actually a very simple process: it provides a business with instant cash flow in order to satisfy its cash needs, which in turn enables the business to grow and prosper.

 

It works like this! Your company has quality accounts receivables, and needs a cash boost. A factoring company may purchase just one, or a group of your receivables, and in return will immediately give you up to 100% (less fees applicable) of the face value of these accounts. Once the customer invoice has been paid in full the balance is forwarded on. Yes, factoring costs more than other means of lending, but factoring clients believe the benefits far outweigh the costs.

 

The Benefits of Factoring

 

Possibly the greatest benefit of factoring is the short turnaround time, because factoring companies don't have a lengthy loan approval process, unlike banks and other lenders. This means that, with factoring, trucking business owners can have money in-hand by the end of the same working day!

 

In order to receive approval as a factoring customer, a trucking business must first-of-all be a reputable trucking business, and secondly, it must have credit-worthy customers. Once a business has been approved for factoring, funding will be provided on the same day. It's important to note, also, that ongoing financing is only limited by the amount of receivables available for purchase.

 

In the last decade we've seen factoring grow very quickly, and today it's become a financially feasible alternative for many trucking companies. Many trucking companies have stated that Freight Bill Factoring has made it possible for them to process orders and undertake loads from brokers that would otherwise have been impossible because of a lack of financing. Freight Bill Factoring is here to stay, and it clearly has a place in today's business environment. Because of factoring, a trucking company can expand its customer base, increase loads, and even survive a seasonal slump. Thanks to Freight Bill Factoring, many businesses have been able to expand and grow, and easily survive in what has become a very competitive industry.

 

 

 

 

 

Dayton Factoring Companies Articles

Medical and Healthcare Invoice Factoring

 

Don't Wait to Be Reimbursed - You Can Receive Payment Today!

 

Anyone in the healthcare profession is painfully aware that third-party payers like Medicaid, Medicare, HMOs, Workers Compensation, and other private insurers, can take what appears to be an unnecessary long time to settle your accounts. But there's good news, because with 'factoring' there'll be no more long waiting periods to receive payment on your medical receivables. For anyone in the healthcare profession who provides any type of medical services, factoring is here to assist with cash-flow.

 

Is There a Difference between Medical Factoring and Healthcare Factoring?

 

There actually is a difference between these two types of factoring, even though we hear many people using these two phrases interchangeably. Basically, when there is no third-party payer involved, then healthcare factoring applies, and if a third-party payer is involved, then medical invoice factoring companies are used.

 

Healthcare and medical receivables factoring is available for the following services -

 

- Hospitals

 

- Group and Sole Practitioners

 

- Laboratories

 

- Physical Therapy and Rehabilitation Facilities

 

- Chiropractors

 

- Nursing Homes

 

- Durable Medical Equipment (DME)

 

- Medical Staffing Companies

 

- Medical Billing Services

 

- Medical Supply Companies

 

- Medical Coding Services

 

- Ambulance Providers

 

- Medical Transportation

 

- Medical Transcription Services

 

- Medical and Non-Medical Home Healthcare Providers

 

- Imaging Facilities Providing CT Scans, X-Rays, MRIs, and so on; and

 

- Many More!

 

Factoring for Healthcare Receivables

 

We typically associate healthcare receivables with customers who are not reliant on third-party payers. This includes sectors involved with medical staffing, medical supplies, medical transcription, medical coding and billing, and so on. Basically, it means that vendors who use healthcare factoring receive the benefits of an unlimited line-of-credit, all based on the services they provide.

 

 

You can see below that factoring healthcare receivables is a very simple process -

 

 

- As the healthcare vendor, you still invoice your customer for work you've completed. Some of the more common customers will include medical offices, nursing homes, hospitals, and so on.

 

- The next step is for the vendor to forward a copy of the invoice to the healthcare factoring company. Your factor will handle the collection of payment on your behalf.

 

- The factoring company will deposit an amount of money in the range of up to 85% of the gross value of the invoice into the vendors bank account within 24 hours, or less.

 

- The remaining (approximately) 15% will be held by the factor until such time as the account has been paid in full by the customer.

 

- Once the invoice has been paid in full by the customer, the factor will release the remaining 15%, less the agreed-upon fees, back to you, the vendor.

 

Factoring for Medical Receivables

 

Regardless of whether your business bills Medicaid, Medicare, Blue Cross/Blue Shield, a third-party insurance company, or HMOs, we have the perfect factoring solution for you.

 

The benefit to you of factoring your medical claims is that you'll receive upfront capital. It's the factor who will seek payment of your invoice.You can see below that factoring medical claims is a very simple process -

 

 

- As the provider, you'll continue submitting your claim to the third-party payer.

 

- At the same time, you'll submit a copy of the paperwork to your factoring company.

 

- The factoring company will deposit an amount of money in the range of up to 85% of the net collectable value into the vendors bank account within 24 hours, or less.

 

- Once the third-party payer pays your claim in full, the factor will release the remaining 15% (approximately), less the small agreed-upon factoring fee.

 

 

 

 

Dayton Factoring Companies Articles

Small Business Invoice Factoring: The Clever Choice!

 

Many small businesses are discovering invoice factoring and quickly realizing this was a very smart business choice! Why? Because small business invoice factoring converts receivables into immediate cash!

 

The Ideal Alternative to Traditional Bank Loans

 

Small businesses are discovering that invoice factoring is the perfect, and much easier, alternative to traditional funding sources, like bank loans and cash advances. Any small business who sells to the government or other companies can use invoice factoring to enjoy the many benefits of accessing immediate cash flow. Whether you've applied for traditional funding and been refused or applied and are still waiting to hear if you've been accepted, keep in mind that small business invoice factoring is a very viable option for you.

 

How Does Invoice Factoring Work for Small Businesses

 

One of the major benefits of small business invoice factoring is that it's the credit worthiness of your customers that determines the funding decision. This means that if you're a business who sells to the government or other businesses with good credit, you're the perfect candidate for small business invoice factoring.

 

Applying for invoice factoring is a very simple process, and you certainly won't be forced to wait weeks, even months, for a decision as you would with traditional funding sources.

 

Why Small Businesses Are Choosing Invoice Factoring

 

Many businesses are only just learning about invoice factoring, even though factoring has been around for a long time. Any business owner who has applied for a bank loan knows only too well that, to start with, the application process can take months, and secondly, there's still no guarantee you'll be approved for finance.

 

According to the Small Business Administration, in the first quarter of the year 2015 small business loan approval rates at banks were 22%, and at credit unions it was 43%. The limit on business credit cards is often capped at less than $100,000, which is often not sufficient to cover unexpected expenses or large projects.

 

Invoice Factoring: The Smart Alternative to Traditional Lending

 

Today, small business invoice factoring has become the smart alternative for many business owners because factoring provides an immediate cash advance, with no restrictions placed on the money received. It's also important to note that factoring is not a debt, which means there are no limitations on how you choose to use the funds received.

 

Yes, small businesses can access quick money with a merchant cash advance, but there's always a high cost involved. You'll soon discover that the cash advanced will cost your business more than 70% effective annual interest. Alternatively, cash advance lenders demand daily repayments with full payment due in just a few months. The demand for daily payback can destroy a small business, but sometimes business owners are left with no choice.

 

So, let's take a quick look at just some of the benefits of small business invoice factoring, and once you read through this list we're sure you'll think of more benefits to your own business.

 

With this immediate cash advance you'll be able to -

 

- Employee new staff members

 

- Easily meet payroll

 

- Accept larger orders from bigger customers

 

- Invest in marketing and sales

 

- Expand manufacturing and production

 

- Your business will be able to weather cash flow cycles and seasonal sales periods

 

- Pay down any existing debt

 

- Take advantage of early pay discounts from your suppliers (these discounts often cover your factoring fees)

 

- Extend your customers' payment terms

 

- Provide a smooth cash flow to support daily business operations

 

- Overheads are lowered due to reduced administration expenses

 

- Your business will be self-financed during rapid growth periods, without having to give up equity.

 

As you can see, the benefits of small business invoice factoring are many and varied, so why not contact us today and let's talk business!

 

 

 

 

 

Dayton Factoring Companies Articles

The Difference between Accounts Receivable Financing and Factoring

 

Today, it's not as easy for businesses to access finance as it was in past years, and more companies are being forced to look for alternative, non banking financing options in order to access the capital they require to help their business grow.

 

Two of the more popular tools available to cash strapped business owners are Accounts Receivable Financing (A/R Financing) and factoring. Some business owners believe these two are the same, but there are, in fact, some small yet significant differences.

 

What Is Factoring?

 

Factoring is when a commercial finance company, also known as a factor or factoring company, purchases a business's outstanding accounts receivable. At that time, the factor will typically advance the business somewhere between 70% and 90% of the invoice's value. Then, once the invoice is collected from the customer, the remaining balance - minus a factoring fee - is released to the business. The factoring fee could range from between 1.5% and 5.5%. It's calculated on the total face value of the invoice and depends on how many days the funds are in use and other aspects, like the collection risk.

 

When a business has a factoring contract they can usually choose which invoices they want to sell to the factor: it's not generally an all or nothing process. Once the factor has purchased an invoice they become responsible for managing the receivable until the account has been paid. Essentially, the factor becomes the business's accounts receivable department and credit manager, analyzing credit reports, performing credit checks, mailing invoices, and documenting payments.

 

What Is Accounts Receivable Financing?

 

Accounts Receivable Financing is more similar to a traditional bank loan, however there are some key differences. Bank loans are secured with collateral; which might be real estate, the business owner's personal assets, or plant and equipment; whereas Accounts Receivable Financing is backed by the business's assets related to the Accounts Receivable. When a business has an Accounts Receivable financing agreement, a borrowing base is established at each draw against which the business is able to borrow money: this would typically be between 70% and 90% of the qualified receivables.

 

Between 1% and 2% is typically charged as a collateral management fee against the outstanding amount, and interest is only calculated as and when the money is advanced. An invoice must be less than 90 days old in order to count towards the borrowing base, and the finance company must deem the business credit worthy. There may also be other conditions to fulfil.

 

So, you can see that there are many similarities between Accounts Receivable financing and factoring; however, one is the sale of an asset (receivables or invoices) to a third party, while the other is actually a loan. In many ways, though, they do act similarly. Below we've listed the main features of each so you can determine which would be the best fit for your company.

 

Accounts Receivable Financing

 

' Generally, Accounts Receivable Financing is not as expensive as factoring;
' It can be easier to move from this type of financing to a traditional bank line of credit once a business becomes bankable again;
' Typically, a minimum of $75,000 per month is required in sales to qualify, so this type of financing may not be available to small companies;
' Due to the fact that the business will be required to submit all of its Accounts Receivable to the finance company, this type of financing can be less flexible than factoring.

 

Factoring

 

' It's quite easy to qualify for factoring, and factoring is the ideal solution for start ups and financially challenged companies;
' Because businesses can decide which invoices they want to sell to the factor, factoring offers more flexibility than Accounts Receivable Financing;
' The company is able to track total costs on an invoice by invoice basis because factoring has a simple and easy fee structure.

 

In Conclusion

 

Today we see both Accounts Receivable Financing and factoring as traditional sources of financing; effective when traditional bank financing is not an option. Factoring can carry a business through a period when an immediate cash input is required.

 

Somewhere between 12 and 24 months most companies are generally able to repair their financial situation and once again become bankable. However, some companies in certain industries continue factoring their invoices indefinitely.An example of this is the trucking industry, which relies heavily on factoring for cash flow injections.

 

 

 

 

 

Dayton Factoring Companies Articles

About Invoice Factoring

 

Perhaps you've heard about Invoice Factoring but you're not sure how it works or how it might help your business. The purpose of this post is to provide a clear explanation of what Invoice Factoring is and how it works.Basically, Invoice Factoring is a viable alternative to traditional financing methods, providing your company with fast access to working capital. There's no large debt to repay and there are no strings attached. It probably sounds too good to be true, but we can assure you it's not! Invoice Factoring has become a lifesaver to many businesses, so let's go into this a little further to see how Invoice Factoring might help your business go from just so-so to really great!

 

How Invoice Factoring Works

 

A very brief definition of invoice factoring is that it converts your open invoices into immediate cash, which of course sounds perfect if you're experiencing a cash flow problem. Factoring saves you from having to wait the 60 or 90 days (sometimes even more) for payment by your customers. With invoice factoring you have the flexibility to factor whichever invoices you want and however many invoices you need, to ensure you have enough cash on hand to grow your business.

 

The following is a short description of how the process works -

 

Once you and your chosen factoring company have reached an agreement and set up your account, you're now free to begin submitting copies of your unpaid invoices to the factoring company. These invoices must be for products that have been delivered or for work that's been completed. With invoice factoring you simply continue invoicing your customers as usual, then fax or email a copy of the invoice directly to your factoring company.

 

Now here's the good part! You'll receive a cash advance within 24 hours! Once the factor has verified your invoices, a deposit of as much as 95% of the value of the invoices will be deposited directly into your bank account.

 

You continue working as per usual, and the factoring company works to collect on your accounts. It's now your factor's responsibility to engage in the active collection of these accounts, thus allowing you more time to focus on the big stuff, like providing your customers with excellent service and continuing to grow your business.

 

As a customer of the factoring company you can repeat this process with as many different clients as you want and as many times as you want. You may choose to factor all of your clients, or just the clients that are known for being slow-paying clients. The choice is yours!

 

The Benefits of Invoice Factoring

 

Once you're working with an invoice factoring company you'll have control over your cash flow, and more importantly, you'll have a working relationship with your factor that will help your business grow in lots more ways. Let's take a closer look at some of the ways a factoring company can help you grow your business -Credit Checks and Background Verification

 

It's important to all businesses that they work with honest, reliable customers; customers who have a solid payment history. Sales must be turned into revenue as quickly as possible. However, we know that credit checks and background verifications can be very expensive and these costs very quickly eat away at your working capital. Now, it will be your invoice factoring company who provides these checks for you, at no additional charge. This means that any issues will be addressed before they affect your business, thus ensuring that you're working with top-quality customers.

 

Credit Repair and Credit Building

 

Even if your business credit is less than perfect, you can still apply for a competitive invoice factoring program. The benefit of this to the business owner is that, not only will factoring your open invoices cover your daily operating costs, it will also help pay down any current debt in order to rebuild your credit rating. The good news is that start-ups also qualify for invoice factoring so, if you're just getting your business off the ground, factoring is the ideal financing alternative to help you hit the ground running.

 

Other Money Saving Opportunities

 

Invoice factoring can certainly save your company money, and it's not only with competitive rates. By negotiating with your suppliers for early-pay discounts or other payment incentives, you'll soon discover new ways of putting your rejuvenated cash flow to good use. And don't forget that, depending on how much you factor, you could well qualify for a volume discount, and this will further reduce your rates.

 

Steady and Consistent Cash Flow

 

When you begin factoring your invoices you'll be able to regain complete control of your working capital. Whether you're simply tired of waiting up to 90 days for money that's owed to you, or perhaps your business is subject to seasonal fluctuations, either way, invoice factoring is the ideal method for regulating your cash flow.

 

Now You Can Start Dreaming Big!

 

You may have become used to business being steady, but with invoice factoring you'll have the opportunity for business growth in many new ways .

 

o You'll be able to attract larger clients, with better contracts;
o Increased business marketing efforts;
o New technology investments, or upgrades;
o The ability to employ more staff;
o Training and further education programs for existing staff;
o Relocation of your business, or site expansion.

 

Finally, No More Debt!

 

One of the most attractive things about invoice factoring is that it's not like a traditional loan: it won't add additional debt to your balance sheet. In fact, it's actually the opposite; because Invoice Factoring provides you with the extra cash you need to be able to settle old debts. With factoring, it's already your money so there's no money to pay back and no interest to pay. All factoring does is help you get your money into your bank account - quicker!

 

Why Haven't I Heard of Invoice Factoring Before?

 

This is a question a lot of business owners ask. Invoice factoring certainly isn't new, but maybe it's just been overshadowed in the past by bank loans and other types of business investments. The fact is that factoring goes right back to the days of the Roman Empire, where factors assisted businessmen (usually farmers) in growing their business. Then, later, it was used in the textile and clothing industry to help pay for raw materials, to finance transactions, and accept larger purchase orders. Today, invoice factoring is used by many different types of industries, such as:

 

' Construction
' Transportation
' Medical
' Staffing, HR
' Consulting
' Engineering
' Marketing/Media

 

Becoming Familiar with Factoring Terminology

 

Don't be discouraged because you don't understand factoring terminology. See below for an explanation of general factoring terms :

 

' Account Debtor:
An account debt or is your customer.

 

' Accounts Receivable Ageing Report:
This is the name given to a report which shows the financial figure of unpaid receivables, in addition to how long they've remained unpaid.

 

' Accounts Receivable Factoring; also known as Invoice Factoring:
These two terms can be used interchangeably because they mean exactly the same thing.

 

' Discount Rate:
This refers to the percentage of the invoice charged by the factor as a fee for advancing funds.

 

' Due Diligence:
This refers to the background research carried out by the factor to determine potential customers.

 

' Factoring Advance Rate:
This rate is a percentage of the invoice that's advanced within 24 hours to the client - this figure is generally between 80 and 95% of the total amount of the invoice.

 

' Factoring Broker:
A factoring broker is a third party whose position is to connect business owners with appropriate factoring companies in order to meet the business's goals and needs.

 

' Lien:
The right to retain possession of property until a debt has been discharged.

 

' Non-Recourse Funding:
Most businesses have experienced customers who fail to pay their invoices within the agreed payment terms, or worse, the invoice is never paid at all! Non-Recourse Funding is when the factor assumes all responsibility for unpaid invoices. Because the factoring company is accepting the risk, Non-Recourse Funding is more expensive than Recourse Funding.

 

' Recourse Funding:
With Recourse Funding, your company must buy back the receivables if your client fails to pay within the agreed payment terms.

 

' Reserve:
This is the amount of the Accounts Receivable retained by the factor until such time as full payment has been made by the customer.

 

' Spot Factoring:
This refers to a one-off agreement that offers staffing companies the ability to factor just one single invoice.

 

Your Customers, and Factoring

 

It's important that we point out here that factoring is not a negative thing, and your factoring company is definitely not a collections agency. In fact, it's important to your factoring company that they maintain good relationships with both you and your customers, and it's their aim to provide the best customer service possible. It's in your factoring company's best interests that the factoring process works as smoothly as possible.

 

The following will give you a general idea of how factoring works :

 

' Once you've made the decision to start invoice factoring, your dedicated account manager will start by verifying that your debtors are indeed customers, in addition to advising them of your new remittance address. It's important to remember that it makes no difference to your clients where they send their payment: they know their invoice must be paid, so this is simply a change of address for payments.

 

' Your factoring account manager will be very experienced and will assure your clients that they'll be well taken care of, and that the factoring company will be managing your invoices in future by taking over your accounts receivable. And that's all there is to it! Nothing will change between your company and your customers: you'll still invoice them as usual, and they'll simply forward their payment to a new Post Office box. Your account manager will be available to help if any problems should arise.

 

What You Should Look For in a Factoring Company

 

Once you start doing your own research you'll discover that there are many factoring companies out there, but they're definitely not all equal. The following are points to consider when comparing factoring companies:

 

' Fees
As we've explained, factoring is a little more expensive than a traditional bank loan, but some small businesses don't qualify for a bank loan, so being able to achieve some working capital is better than none at all. Do your research, and make sure you understand the overall cost of factoring, in addition to the extra smaller fees that may be charged by your factor. These extra fees may include account set-up fees, application fees, credit reports, costs to research any liens, charges for last-minute funding, or for money transfers. Not all factors charge these extra fees, and not all factors have hidden fees, which means that it's very important that you choose a factor you're comfortable with and one that you can trust.

 

' Flexibility
This is a very important aspect of factoring, and one we can't stress enough. Make sure you very carefully read the fine print of your factoring contract! If you start working with a factoring company and then realize that you're locked into terms that don't suit your own particular circumstances, you're going to be extremely unhappy. These unsatisfactory terms might include how much you're able to factor each month, or being tied to a specific factoring company for the life of your business. If you sign up for a long-term contract, then change your mind, it's going to be a very expensive exercise trying to get out of the contract. Don't let this happen to you! Be very clear on how much you can factor each month, which clients are eligible for factoring, and how long you're signing up for.

 

' Communication
At one point or another we've all had to deal with a business with poor communication skills, and we probably all agree that it's extremely frustrating. So, imagine a business with poor communication skills that's also handling your money! Naturally, when it comes to your business and your money, you need someone that's going to immediately respond to your inquiries. All factoring companies are going to say their customer service is second-to-none, but be very cautious here. Pay close attention to when and how your potential factoring company responds to your calls and emails, because this is how they'll be responding to your customers. If you're not 100% happy then move on to another factoring company, because there are certainly plenty to choose from!

 

' Industry Expertise
Remember that there are many factoring companies out there servicing many industries, so you should be looking for one that services your own industry. Ideally, you'll choose a factoring company that specializes in your niche, which means that they'll already understand a lot about your business. The bonus of using a factoring company with industry expertise is that they may also offer programs specific to your industry, such as fuel cards and back-office support. It's these extras that may prove very beneficial when making your final decision on a factoring company.

 

 

 

 

 

Dayton Factoring Companies Articles

Questions You Need to Ask Your Factoring Company

 

In today's marketplace we're seeing more and more factoring companies, and factoring fees, rates and agreement terms have become very competitive. This means that, as a potential factoring customer, this competitiveness should work to your advantage. However, there are some issues you must consider when choosing a factoring company to suit your specific requirements.

 

Before entering into any factoring agreement, here are some important questions you should ask -

 

What Are Your Terms?

 

As a factoring customer, you'll be looking for as much flexibility in your factoring agreement as possible. It may be that you choose a long term contract with your factoring company if it includes flexible rates or a price break. In today's competitive market, many factoring companies are agreeing to adjust their rates based on competitive offers from other factors or increased factoring volume.

 

The majority of factoring agreements are a one year contract, which appears to be industry standard, and this contract will renew automatically unless you provide the factoring company either 60 or 90 days notice.

 

What's Your Fee Structure?

 

The fee structure may vary depending on both the factoring company involved and your industry. Some factoring companies charge a flat fee, which is calculated as a percentage of the total value of the invoice. On the other hand, other factoring companies charge additional fees to cover costs associated with doing business, such as money transfers, software, and so on. Ensure that the factoring company you're considering working with is completely upfront and transparent with you about its terms and fees.

 

Are You Able to Offer Both Recourse and Non Recourse Factoring?

 

Recourse factoring:

 

Recourse factoring is less expensive than non recourse factoring. With recourse factoring, you (being the client) are ultimately responsible if the factoring company is unable to collect on your customers' invoices. However, you're not necessarily required to pay the debt out of pocket if you have a recourse agreement and the customer defaults on payment. It may be that the factoring company will withhold a portion of future cash payments or payments held in reserve, with the money being placed in an escrow account until such time as the debt has been paid.

 

Non recourse factoring:

 

When you have a non recourse factoring agreement, the credit risk for the collection of customers' invoices lies with the factoring company.Therefore, we believe it's to your advantage to use a factoring company that offers both recourse and non recourse factoring, simply because you may find that some of your customers are more suitable for recourse factoring than others. In addition, you need a factoring company with a strong credit team because they can work with you to ensure you're dealing with good customers: to a certain degree this will relieve some of the pressure of being responsible for bad debt.

 

How Long Has the Factoring Company Been in Business?

 

With the marketplace becoming increasingly competitive, today we're seeing the creation of more and more factoring companies. However, many of these companies are recent start ups, with limited industry experience. Make sure you research the factoring company's history prior to entering into any factoring agreement: also research its background into providing financial services in your specific industry.

 

Do You Have the Capital to Grow with Me?

 

The fact that there's no limit to the level of financing is the major advantage factoring has over traditional bank lending. As your company continues to grow, so too should the funding of invoices grow with you. Do your research and learn as much as possible about your potential factoring company's client base and their capital structure.

 

Does this factoring company have a limit to the number of debtors it takes on? What's a typical account size? What's the factoring volume of their largest client? You'll probably find that factoring companies who have been serving your industry for many years will have greater capacity to finance your company as it continues to grow.

 

Is There Anything Else You Can Do for Me?

 

Obviously, factoring is more expensive than a conventional bank loan, and this is partly due to the back office services that your factoring company is able to provide. Besides collections and financing, many factoring companies will evaluate companies in your industry and provide credit information. Therefore, when looking for a factoring company for your business, make sure the one you choose offers additional services and products that can assist you in making good business decisions.

 

How Do We Start Factoring?

 

Fortunately, factoring companies are not unduly concerned about your balance sheet before they decide to work with you, unlike banks. However, they do have a process to follow when selecting new clients, so be sure you understand what the factoring company is looking for when it's considering you as a client. Are they looking at your credit ratings and/or your customers' payment histories?

 

Are they looking at your personal credit score?

 

In many cases a company will start factoring because it's looking for a quick injection of cash, so you need to know how many days the factoring company will take to review and process your application.

 

 

 

 

 

Dayton Factoring Companies Articles

The Basics of Invoice Factoring: Choosing a Factoring Company

 

Probably the biggest frustration for business to business (B2B) companies is waiting to get paid.Anyone involved in a seasonal business, long payment cycle, or lumpy cash flow will be able to relate to this statement. Some customers are very slow payers (of course corporate clients and governments come to mind!) and other customers demand generous terms.

 

Explaining Invoice Factoring

 

Basically, with invoice factoring your current but unpaid invoices are turned into cash - it's a financing solution for businesses. Other terms used for factoring are 'Accounts Receivable Financing', 'Invoice Financing 'and 'Receivables Financing'. Because many clients demand generous terms, it means that invoices can remain unpaid for anywhere between 30 and 90 days; while in the meantime you're left without cash and falling behind on important expenses, such as payroll, and missing opportunities to grow your business. And this is where factoring comes in: factoring reduces, and sometimes eliminates the frustration of unpaid accounts.

 

A receivable financing transaction usually involves three parties, and these are the company that initially issues the invoice, the customer who is required to pay the invoice (otherwise known as the account debtor), and the 'factor', which is the financing company prepared to supply the cash.

 

Explaining Invoice Financing

 

An invoice is issued to a customer after a company has delivered a service or product. This invoice will now be sold to the factor and, in return, the company will receive a cash advance: this will usually be between 70% and 90% of the invoice's value. With this cash the company finds it easier to pay employees; plus, it can now purchase supplies, materials, and inventory, and it can take on more work. Once the debtor pays their invoice the business will receive a rebate for the rest of the funds, less a fee which will be based on the value of the invoice and the term. This type of financial agreement benefits all three parties: the customer receives cash almost immediately, the debtor gets favorable payment terms, and the factoring company collects a fee.

 

Explaining the Difference between Traditional Bank Financing and Invoice Financing

 

There are, of course, both drawbacks and benefits to this type of financing for businesses. The obvious benefits of factoring are a simpler application process, quicker funding, and higher approval rates when compared to bank lending. Having access to cash allows a business to grow, to meet payroll, achieve supplier discounts for bulk purchases or early payment, and to purchase equipment in order to improve productivity.

 

Factoring has a very simple application process which eliminates some of the main hurdles placed on small businesses by banks. The speed of funding with factoring offers businesses the opportunity to take advantage of opportunities as they arise. In addition, the high approval rates with factoring means that many more businesses qualify, even though they may have previously been declined by a bank. Another bonus is that funds received from factoring invoices can be used to supplement bank credit, if necessary.

 

On the other hand, when it comes to cost, a line of credit at a bank is less expensive than factoring; this is assuming that the business will be successful in their application to the bank and that they'll have access to the finance within a reasonable timeframe. Unfortunately, these applications are not always successful (four out of five companies are refused bank loans), while others find the whole process too discouraging.

 

Another possible issue with working with traditional factoring companies is that some of these companies will advise your customers that their invoices have been financed: this information can cause issues for some small businesses because they prefer to maintain control over all correspondence with their clients. Other factoring companies actually take control of your account receivables. Our advice is that you look for a factoring company that's prepared to work on a non notification basis.

 

Receivables Financing Has Become Good Business Sense

 

Today we see factoring becoming quite commonplace in many industries, such as IT companies, professional services, wholesale trade, marketing, manufacturing companies and so on. Many, many industries are discovering the benefits of receivables financing.

 

Invoice factoring is an ideal solution for business to business companies who issue invoices payable within 15 to 90 days. Any B2B company who's experiencing rapid growth, long payment cycles, or lumpy cash flow, will benefit the most from accounts receivable factoring. On the other hand, businesses and business to consumer (B2C) companies that are paid on delivery and don't issue invoices would have no need of factoring services.

 

If you're interested in invoice financing and believe it may be an option for your business, see below for our tips on how to approach working with a factoring company.

 

How to Work with an Invoice Factoring Company

 

There are many advantages to invoice financing, but it can be tricky working with some traditional factoring companies. Some factoring companies don't have excellent customer service, and between confusing terms, long term contracts, monthly minimums, and hidden penalties, the experience can be quite daunting. Our aim is to ensure that you get a fair deal when working with a factoring company, and please remember that, as always, if a deal sounds too good to be true, then it probably is!

 

You're Looking for Transparent Factoring Fees and Rates

 

Companies that make it difficult to work out their all inclusive fees are companies who are working for their own advantage, so when determining pricing, transparency is key. If you're getting frustrated and not receiving direct answers, we suggest you move on to another factoring company that will be respectful of your time.

 

Another Word of Caution: Beware of receivables factoring companies who advertise low rates, which then increase when all their hidden fees come to light. We've heard of factoring companies who charge low monthly factoring rates, but you'll be charged for two months' even if the invoice was paid in one month and one day. We also know that some factors require monthly minimums, which means that you pay for financing even if it's not required. We strongly suggest that you read our article on factoring rates and tricks so that you approach factoring with knowledge and awareness.

 

Understanding Penalties, and How to Avoid Them

 

Be aware that some invoice factoring companies out there have hidden penalties. In order to avoid these penalties, you need to know why they occur. If you believe these penalties are out of proportion or unfair, then move on to another factor. It won't be long before you'll understand what fair and reasonable terms look like.

 

Read the Fine Print in Your Contract

 

In order to guarantee their profits, most factoring companies will try to lock you into a long term contract. Obviously this is good business for the factoring company, but it may not be so good for your business. You need to know what you're signing up for, so be aware of long term contracts where you'll be charged exorbitant cancellation fees if you should decide to leave.

 

Also, be aware that some long term contracts include minimums, so consider this carefully: you may find yourself paying for something you're not using when you only needed the factoring company to meet occasional cash flow needs. You shouldn't be forced to remain with a service that's not meeting your needs, so it's vitally important that you carefully read the fine print.

 

Customer Confidentiality

 

Once you start your research on factoring you'll discover that most factoring companies operate on a notification basis, which means that when you sell your invoices to the factor, they notify your customers. They'll also ask that the funds be routed directly to the factoring company's bank account, instead of your account. This can be an issue for business owners who prefer to have control of all communications with their customers. If discretion is important to you and your business,

 

we strongly suggest that your accounts receivable financing company provides non notification factoring, meaning that you retain control over customer communications. If this is not an option for your factoring company, then you need to move to a companythat will provide non notification factoring.

 

How Much Cash Will You Receive Upfront?

 

You'll receive an advance upfront, which is a percentage of the face value of the invoice. This advance will probably be somewhere between 70% and 90% of the invoice's face value. For example, let's say your customer owes you $1000: your advance payment should be somewhere between $700 and $900.

 

Factoring Minimums Compared with Single Invoice Discounting

 

You'll also notice in your research that many factors require small businesses to submit all invoices from certain customers. On the other hand, 'single invoice discounting', also known as 'spot factoring', means that the business concerned determines which invoices will be sent to the factoring company for advance payment. Make sure you understand your factoring company's terms before you sign anything. Single invoice discounting or spot factoring is generally the preferred method for small businesses because it enables you to retain control over your financing by determining which invoices will be sent for factoring.

 

Choosing Your Factoring Company

 

Think about all the above criteria, and look for a business partner who will provide your business with the best combination of flexibility, features, and terms that you require. By doing a little research you'll soon find a partner and an agreement that offers you the flexibility, funds, terms, and transparency that work best for you. Your aim is to find a partner that you'll be happy to work with long term, so don't settle for anything less.

 

 

 

 

 

 

Dayton Factoring Companies Articles

How Factoring Saved A Staffing Agency

 

The Bellosa Temporary & Permanent Hiring Agency has been experiencing a major uptick in business since the unemployment crisis began. The unemployed and underemployed workers have been keeping the phones ringing. The staffing agency is also fielding a lot of calls from employers too, looking for just the right hire. Company President and Vice President, Laurie Bell and Ted Stevens, have not experienced a boom in business since they first opened the doors in 2009, during the recession. They had an idea then that this would be a profitable venture.

 

The mantra that Laurie and Ted live by is that there's always going to be people searching for work and of course employers will always be on the lookout for good workers. This is especially true in healthcare staffing, the industry they specialize in. This seemed to be a safe bet for them as they embarked on this venture, but with any small business, the only way to keep the doors open is to keep pressing forward and out perform the competition.

 

In a relatively short period of time Laurie and Ted had built a nice sized business, they were able to hit the ground running with some brilliant marketing programs and a number of contracts from insiders. They grew rapidly, the timing couldn't have been better and they were very lucky in this aspect. By the fall of 2011 Laurie and Ted had weathered some ups and downs but they did have some solid clients like a few big insurance companies and a university hospital close by. These clients always paid their invoices on time. But they did start to notice a decrease in accounts receivables from some smaller clients such as rehab centers and private practices.

 

As winter approached they recalled previous winters and holiday seasons and realized that accounts receivables usually did slow down during this time. Laurie and Ted made the decision to delay their late payments until after the New Year. This plan didn't really appeal to them as it's no way to start a New Year, but they seemed to have no other options.

 

When New Year's had come and gone they realized that their Accounts Receivables had gone from 30 days past due to 60 days past due. Before meeting with their accountant Scott, they'd decided something had to be done, but they didn't know what.

 

Sitting in the conference room with Scott they listened as pulled all the figures up on his iPad saying,"Okay you two, I've been looking over the files you sent over and I can certainly see why you're worried about your late A/Rs but there may be a way to fix this. Do either of you know what factoring is?" Scott inquired.

 

Laurie and Ted looked at each other quizzically, and then Laurie said "I think it rings a bell, but I'm not really sure. Can you explain it?"

 

Scott began laying out the details, "You are sitting on a pile of invoices that are past due. The more time that goes by without them being paid, the bigger the bind this puts your business in. It makes it very difficult for you to grow, much less hire anyone new. If you don't have enough cash coming in . "

 

Ted interrupted with, "Then it could make it difficult to take on any new business because we wouldn't be able to hire the additional personnel we need and meet our weekly payroll. We need an inflow of cash and we really can't wait. If we have to wait any longer on these invoices we'll be in trouble."

 

Scott jumped in saying, "And this is precisely why I wanted to discuss factoring with you. The factoring company will purchase the invoices you are sitting on that are up to 3 months late, which gives you the cash you need now." He then showed him a chart on a piece of paper he placed in front of them.

 

Laurie began to carefully scrutinize it asking, "Is this the fee schedule?"

 

Scott answered, "Yes it's all right there. The factoring company makes 1% to 3% of the total amount of each invoice they purchase."

 

"That's sounds like a good deal to me", Ted said.

 

The three of them sat there and talked this over for a while and then Laurie and Ted made the decision to go forward realizing this was the best way to keep them afloat. They knew if they couldn't accommodate all the new clients they were acquiring the competition would get them and they would go down, they could just not afford to turn any business away.

 

They now needed to fill out an application and submit it to the factoring company and they also needed to show them a few back invoices, undergo a credit check for their company. Credit checks would also need to be done on the companies owing the debts that the factoring company would be purchasing.

 

It didn't take long for Bellosa's credit to be approved and the creditors' as well. Before long the factoring company purchased the overdue invoices and Laurie and Ted got the influx of cash they needed to cover things and allow them to continue growing their business.

 

The next time Laurie and Ted met with their accountant Scott, there were smiles all around.Scott said, "I've taken a look at your books so I know that factoring was the right solution for you."

 

"It worked perfectly", Laurie stated and went on to say, "The tiny amount we paid out for this influx of cash was certainly worth it."

 

Ted chimed in with, "Without a doubt! Whatever the fees were we made back and more since we were now able to hire more personnel so we could take on more business. It worked out for us and for them I would say!"

 

"That's what's great about factoring!" Scott exclaimed with a look of satisfaction on his face.

 

 

 

 

Dayton Factoring Companies Articles

Oilfield Services Factoring Services

 

Running a company in the oilfield services industry is no easy business, especially with payrolls to meet, equipment to purchase and deadlines that must be met. The sheer complexity of combining the geological research and modeling, imaging and exploration and finally the drilling to see whether oil is really present can take a lot of investment before any payoff can be seen.

 

For those who own a Frac Sand Hauler for example, the efforts that must be put in to start such as business can be considerable. But arguably the biggest challenge is paying the expenses as the invoices come in. A Frac Sand Hauler often has expenses that must be met immediately, but their invoices can take up to 60 days before they see the money.

 

What follows is an interview with Ray McClerand, a man who owns a Frac Sand Hauler business and ran into the same difficulties that many new companies of his type face. How Ray overcome some of the challenges in paying his bills through oil service factoring are explained in the interview.

 

"Welcome Ray, I'd like to know first why you decided to start up a Frac Sand Hauler company and how you prepared for the challenges it created."

 

Ray McClerand (RM): "I've been in the oil business for the past 15 years or so working on different jobs from roughneck to foreman to deskwork for different companies. A few years ago I saw the potential of having a Frac Sand Hauler business in this area and got together with a couple of partners to create a company. We sat down, went over the details and decided that this would be a real good time to build a business that was serving a particular need in this industry."

 

"So, I take it you created a business plan and took out the appropriate loans in order to purchase the equipment and hire the personnel necessary to get your company started?"

 

RM: "Exactly. Because I had been around this business for a while, I understood what was needed in terms of personnel and equipment. Plus, I had some contacts with others in the business that needed the type of services that a Frac Sand Hauler provides, so I felt that there was some real potential to make a profitable business work."

 

"How did it go over the first six months or so?"

 

RM: "At first, we were really thriving as my contacts had lined up some business my way. Our loans covered the first six months or so of operations and we were doing quite well with the business we had. My partners and I were certainly happy and everything was going good when something really strange happened."

 

"Could you elaborate on what you mean by "strange"?

 

RM: "Yes, after the first five months or so I started getting requests to have our company work with several other businesses in the area. This would mean having to expand our company through buying new equipment and hiring more people. But we did not have the cash on hand to make such a move. We were getting invoices from the businesses that we worked with, but it was taking up to 2 full months before we actually got the cash."

 

"So, you were making enough money to expand, but you didn't have it on hand because of the invoice system?"

 

RM: "You got it. Add to that our initial money from the loan was running out and we needed to start paying it back as well. I knew that if we didn't expand and accept the new business that others would step in and we would lose that money. So, we were in a real pickle until I heard about oil service factoring companies."

 

"Tell us a bit about oil service factoring and how it helped you out?"

 

RM: "Well, one of my partners had heard about factoring companies, so we checked it out and decided to go with one that was best suited for our needs. A factoring company buys our invoices with cash so we have money on hand to pay our bills and do what we need accomplished immediately. The factoring company then collects the money from the invoices when they become due. It's really been a win-win for what we do."

 

"That's interesting. I wonder if you could you explain a little further just how factoring has helped your company?"

 

RM: "Sure, instead of having to wait up to 60 days before we could collect on the invoices, we were able to have the cash on hand immediately to purchase some new equipment and hire some more people to expand our business. This meant that we could accept the new offers that other businesses were providing for us and not having to pass. I cannot say enough about how factoring really benefitted us when it came to expanding our business."

 

"So, it seems like factoring really paid off for you. Do you still use factoring today?"

 

RM: "Yes we do. Although for the most part we still cash our own invoices, whenever we need money quickly so we can buy some new equipment or expand our business a little further, we go back to the factoring company and cash in our upcoming invoices. It really has worked wonders for our company."

 

"Tell me, what would have happened if factoring was not an option?"

 

RM: Frankly, I don't know how we could be in the position we are today without factoring. In this business, you have to take advantage of new opportunities quickly because there are other companies out there who will step in if you don't. Basically, I don't think we would be anywhere near the company we are today if it had not been for factoring.

 

There is little doubt that Ray's company would not be where it was without oil service factoring that allowed him to expand his company when he needed. For those in the oil industry, having your invoices cashed immediately by factoring companies allows greater flexibility so you can grow your business a lot more quickly and take advantage of opportunities.

 

 

 

 

You Can Find More Information at  https://financingreceivable.com
and at recruitmentandstaffing.org

Call Us Today at: 1-866-593-2195

 

Watch our Factoring Company Video below to see how we work for you.

 

 


 

Get CASH NOW for your outstanding invoices.

 

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