Accounts Receivables Factoring is the missing piece of the “If we only had”…cash flow puzzle.
If your business is searching for a working capital solution to build inventory, add employees, make payroll, or quickly respond to new opportunities, Factoring is the most versatile cash flow solution available for small, start-up, and emerging companies.
How does Factoring work? Many business owners we speak with are unsure they understand factoring. Factoring is a simple, straightforward transaction. A Factor (lender) will purchase your invoice(s), at a slight discount to face value, advancing between 75-90% of each invoice (depending on your agreement) and settle the balance when the invoice is paid.
Small, Start-up, and Emerging Businesses often do not have the credit profile to secure the conventional financing required to fund day-to-day operations and pursue growth opportunities. If your company is frustrated by a lack of available capital, factoring can provide the necessary liquidity by effectively leveraging your customer’s credit profile.
Benefits of Factoring:
- The Factor’s lending decision is primarily based on your customer’s credit profile.
- Factoring facilities expand with the level of your accounts receivables, providing the liquidity to fuel even rapid growth.
- No minimum Time in Business requirement.
- No blanket liens on your assets.
- You control the process, selling only the invoices necessary to solve your cash flow needs.
- Non-Recourse factoring facilities available.
- Because the Non-recourse Factor is assuming credit risk, they perform an extensive credit analysis of your customer list. Your business is, in essence, gaining a credit officer.
- Factoring facilities can be combined with Purchase Order financing to provide additional growth capital.
Small Business owners sometimes express concern that customers will view a factoring facility as a sign of financial weakness. In reality it’s just the opposite, having a factoring facility in place with a sound financial institution makes your company a stronger and more dependable business partner.
Clipper’s lender network offers factoring solutions that maximize flexibility and control through recourse and non-recourse alternatives. If your business is currently factoring receivables or considering a factoring arrangement we would like to speak to you about our financing options.