Factoring & Accounts Receivable

What is Factoring and Accounts Receivable Financing?

Accounts Receivable financing is a type of asset financing in which a business’ receivables, money owed to the company, is used as collateral for the loan. Generally, funds received are equal to a reduced amount of the receivable assets. The age of the receivables can also have an impact on the amount of the loan, with older assets receiving less funding.

The amount of funding on an accounts receivable loan is based on the value and age of the receivables. The Funds can be used for all aspects of daily operations including employee wages, utility bills and inventory. Because the loan is supported by the business’ receivables there is no need for another type of collateral. This makes factoring a highly attainable loan for businesses who have been denied a traditional loan in the past.

Once an applicant is approved the financing company typically charges a factor fee. This fee is dependent how long it takes until the invoice is paid. Usually, factor fees are calculated on a weekly basis.

Purchase Orders

Purchase order financing is ideal for business that needs capital to fulfill their customer orders. Rather than asking for collateral, the lender evaluates the credit rating of the customer, not the company.

When customers have a reliable history, purchase order funding is easily attainable, no matter the business credit score. However, the funding provided can typically only be used for the payment of a purchase order and to get the business back on track in fulfilling requests. Purchase order loans can provide funding for up to 95% of the total purchase order.

Merchant Cash Advance

A merchant cash advance eliminates the need for businesses to wait for funds from credit card sales. The loan amount is based on the fixed amount of potential future credit card sales. The lender takes a percentage of each future credit card transaction until the loan is paid in full.

Our merchant cash advance loans can provide funding for most aspects of a business. However, the funds may not be used for purchasing something or holding for future interest value. A merchant cash advance typically does not require a credit check, making it easily obtainable for small businesses and larger companies.

Contract Financing

Whether a business is monetizing on a contract that they are currently in negotiations with, or that they have already secured, contract financing loans provide funding for daily business operations. Rather than waiting to collect on contracts, these lending options allow businesses to start projects and eliminate the waiting involved in repayment from clients.

In addition, contract financing can play a critical role in the fulfillment of the contract by smoothing over cash flow issues. Typically, this financing will provide the funds it needed to deliver on project requirements and fulfill a contract. The funding is typically 80% or more of the total contract and does not require a credit check. This makes it an accessible funding option for both large and small businesses.