Some companies ask their vendors to provide net-90 days or longer to pay invoices. This request often strains the vendor’s cash flow. Few companies can wait three months to get paid. Vendors often address this challenge by trying to finance these invoices. Unfortunately, most net-90 invoices cannot be financed with factoring. This article explains why […]
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What is Non-Recourse Factoring?
Non-recourse factoring is a type factoring financing in which the factoring company assumes the loss if invoices are not paid due to end customer insolvency. It is one of the two common types of invoice factoring offered by finance companies. However, it is also widely misunderstood by clients. In this article, we discuss: 1. How […]
IRS Tax Liens and Factoring
Every so often, we encounter a prospective client with a tax lien against their company. Usually, the lien is related to delinquent payroll, state, or federal taxes. Having a tax lien is a serious matter that affects your ability to get factoring. This article explains how tax liens work and provides a strategy to secure […]
How to Fund Freight Bills Using Factoring
Summary: Most trucking companies encounter cash flow problems at one point or another. This happens because managing a trucking company’s cash flow is challenging. Cash flow problems occur because most expenses are immediate while revenues are delayed by 30 to 60 days. This situation creates a gap in your cash flow that affects your ability […]
Invoice Factoring for Small Companies
Summary: Small business owners often have difficulties finding the right financing for their companies. The lack of financing can prevent business owners from taking on growth opportunities. It also makes it harder to operate the business and handle challenges. This article explains invoice factoring, a financing product that helps small companies improve their cash flow. […]
Who Can Use Purchase Order Financing?
Purchase order (PO) financing is a flexible product that can help small companies handle large sales. However, PO funding has some limitations and is not for every company. This article helps you understand PO financing and determine if your company is a good candidate for it. The following topics are discussed: 1. What is purchase […]
How Do Factoring Companies Verify Invoices?
Factoring companies verify customer invoices as part of the financing process. This article explains why factoring companies verify invoices, how they do it, and how they manage potential issues. We cover: 1. Factoring basics Factoring is a form of financing that allows companies to sell their accounts receivable to a finance company. In exchange, the […]
Why Can’t I Combine Factoring with a Business Loan?
Getting a factoring line if you already have financing in place is difficult. Factoring companies can finance your invoices only after they secure a first UCC position on your accounts receivables. This requirement often conflicts with your current lender’s collateral position. This article explains how loans and factoring lines are secured and provides the criteria […]
Construction Factoring and Retainage Payments
Most construction subcontractors are familiar with the concept of retainage, also called retention. Basically, their general contractor (GC) withholds 5% to 10% (varies) of their payments until the project is completed. General contractors use this practice because withheld funds can be used to fix any issues with the work. Additionally, withheld funds are an incentive […]
Understanding the Factoring Rebate
Most factoring transactions are structured as the purchase of an invoice in two installments. The first installment, usually 70% to 90% of the invoice, is the factoring advance. The second installment, the remaining 15% to 30% (less fees), is the rebate and is usually paid once the customer pays the invoice in full. At least, that […]