Electronic Invoice Factoring Blog

Factoring Invoices - Why is Customer Notification Important?

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Factoring Invoices - Why is Customer Notification Important?

I had a long conversation with one of our prospective clients yesterday about our need to notify her customers that we would be factoring invoices for her. It was important to her that her customers not know that she was factoring, as she believed that her customers would think her business was in financial distress if she needed to factor invoices.  

This is not an usual conversation for me, especially if it is a prospective company in an industry where factoring is not widely used or accepted. My first response to our clients when this subject comes up is to let them know that the vast majority of businesses really aren't adverse to factoring, if it is explained correctly.  What is important for the customers of our factored clients to understand is that the only change they need to make in their "business process" is to have all the payments that they used to make directly to their vendor made directly to our firm (as we are now factoring their invoices). That is it. 

Many prospective clients anticipate a big push-back from their customers regarding the need to bring a factoring company into the loop, when in reality, these customers really don't care. All most customers are concerned about is that their vendor continues to deliver a good or service that meets their expectations. In todays economic environment why would a company be surprised that one of their vendors needed outside financing?

It is important for legal reasons that a factoring company notify its client's customers. In case of a legal dispute regarding a factored invoice, the factoring company may be required to prove that they gave notice to the customer that they had purchased the receivable and where now the rightful holder of the payment obligations related to the invoice.  

To learn more about our online, paperless invoice factoring process for small business click the link below or give us a call. 888.833.2286. 

Factoring Company for Small Business - Online and Paperless

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Factoring Company for Small Business - Online and Paperless

It has been a while since I wrote an article about our paperless process.  I had a call with a client today that reminded me how great having a paperless system is for our clients, and for staff.  

The owner of the business I was speaking has a company that generates many invoices every month and having our online invoice creation tool and our Quick Books integration software made a big part in her decision to pick us as her factoring company.  

When businesses are in the market for a factoring company it can be overwhelming, (I have written articles in the past about a basic methodology for picking a factoring company, click here for a link to that article).  Businesses are bombarded by ads on he internet and phone calls with different factoring companies pitching why they are the firm to pick.

Money is a commodity.  Each factoring company offers a similar product, at a similar price,so when I am on the phone with prospective clients I really try to focus on how our online, paperless process can make things easier for them.  

I am not the best sales person in the world, but it is pretty easy for me to explain to a small business owner that if most factoring companies provide the same product (money), at a similar price, then we can really differentiate ourselves based on our system.  

We built our own software from scratch to make the system as easy as possible for our client to us.

To learn more about our system click the link below or give us a call, 888.833.2286.  It will only take about five minutes for us to explain our process and for you to decide if we can help.

Factoring Receivables - New Client Reporting Functions

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Factoring Receivables - New Client Functions

We just released Version 7 of our online factoring receivables software for small business. 

Since the initial release of our software we have included in our clients initial log in page a place where clients can make suggestions to improve our system.

Included in our latest software release is a function that comes directly from one of our client suggestions.  

In reviewing his account online with us one of our clients suggested that if we were to make all the notes that we enter into the system visible to him it would be easier for him to understand some on the transactions on his account.

Starting last week our client are no able to click on a "notes" hyperlink in their account allowing them to view any notes that our operations team enters in the system. 

This is just one small example of how we continue to build the most userfriendly, paperless factoring receivables system on the internet.

The following is a brief list of some of the functions of our system:

• Paperless invoice creation tool
• FREE online invoice data storage
• Quickbooks integration tool, allowing push button invoice transfer
• Digital invoice collection matrix

Factoring Companies - How to Pick One

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Factoring Companies - How to Pick One

So you heard how factoring might be able to help the cash flow of your business.

Factoring usually insn't something they teach in school so my guess is you heard about how factoring companies work either because they are common in your industry or you have a friend who's company uses one.

When people start looking into factoring as an option for their business they usually type " factoring companies " into Google and get a bunch of ads and articles from different factoring firms talking about how they are the cheapest, or the fastest, or the best.  The purpose of this article is to give you a few simple questions to ask when you start calling factoring companies.

What is most important is that you ask all the factoring companies the same questions so you can compare, apples to apples.

The following is a simple list of questions that should serve as a good starting point for your investigating which factoring company is right for your firm.  After the question I will answer the for our firm.  To learn more some of the industry terms below click word.

• What are your typical invoice advance rates?  Our firm typically advances between 80% and 90% depending on the composition of the receivables.
• Is it recourse, or non-recourse?  All of our facilities are recourse.
• What are the typical contract terms?  60 days
• How long does it take from when I apply until I am approved?  If all the information provided to us is accurate we are typically able to give you an answer within 48 hours.
• Is their an application fee?  No.
• is their a monthly minimum factoring fee?  No.
• Do you have an online invoice creation tool to submit invoices?  Yes.
• Does your system integrate with my accounting software?  If you use Quickbooks, yes.
• What do you charge for ACHs and wire transfers?  We ACH twice a week for free and charge $15 per wire.
• Am I required to factoring all my invoices with your firm.  No.

Factoring Quotes - Now is the Time

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Factoring Quotes - Now is the Time

Now that tax day is over this might be the time to get a factoring quote to see how much it will cost to help finance your business.  Most great things are not free (excluding our Factoring 101 guide!), but being able to sleep better at night without the worries of making payroll, or paying down vendors is pretty close to priceless.

We are in a time of year that can be especially difficult for business.  This is the time when booked orders and sales volume starts to build.  Increases in sales are what it is all about, but make sure to think about how you are going to finance those new sales.

Fast A/R Funding is an online invoice factoring company that specializes in funding businesses with annual revenue between $250,000 and $10,000,000.  

Click the button below to get a free factoring quote.  You might be surprised how easy it is.

1. Free Application
2. Client underwriting and identity verification
3. All document signing
4. Client-side portal will full account transparency 24/7
5. Invoice creation tool and quickbooks integration
6. Online cash advance via wire or ACH
7. Receivables management analytics and tools
8. Customer invoice dissemination
9. Customer credit analysis
10. Automatic email notification with scanned copies of checks from customers

Business Factoring Online - It really does exist!

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Business Factoring Online - It really does exist!

So you want to get some cash from your accounts receivable and in this Internet age you figure you should be able to do it all online, right?  Well, the answer of course, is YES!  There are a lot of claims made by factoring companies that they can advance cash to you quickly, but the most important aspect to be able to accomplish this is being able to do everything online.  I mean everything!  Fast A/R Funding's management team is a very experienced group of finance professionals that decided to turn every aspect of the factoring process upside down and ask the question, why is this done with paper?  The result, after over a year of software development, was a technology platform that enables all steps of the factoring process to be done over the web, truly factoring online.  Below are just 10 of the items available ALL ONLINE at Fast A/R Funding:

1. Free Application
2. Client underwriting and identity verification
3. All document signing
4. Client-side portal will full account transparency 24/7
5. Invoice creation tool and quickbooks integration
6. Online cash advance via wire or ACH
7. Receivables management analytics and tools
8. Customer invoice dissemination
9. Customer credit analysis
10. Automatic email notification with scanned copies of checks from customers

As a company that strives to do all it's business online ourselves, we applaud other companies that do the same. It's good for business (efficiencies) and it's good for the environment.  One of our favorite companies that we try to refer prospect clients to any chance we get is MyCorporation.  Many of our business factoring prospect clients are sole proprietors that have not yet incorporated.  They don't often understand the value or necessity in forming the proper corporate entity (such as an LLC, C-Corp, S-Corp, Partnership, etc.).  Business Factoring companies such as ours require this type of formal corporate organization and good standing certificates. MyCorporation is a place where entrepreneurs can get education about the process and then simply and easily get it all done ONLINE.

Debtor Finance - What Does it Mean?

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Debtor Finance -What does it mean?  

As usual, I got the idea for a blog from a recent conversation I had with a prospective client. A gentlemen that runs a $5,000,000 software company that focuses on developing applications ( apps ) for Apple and the android platforms called me to inquire about debtor finance.  

What our firm does goes by a few different names.  Debtor finance, invoice factoring, invoice financing, accounts receivable lending, invoice discounting...they are all names for basically the same thing.  

What we do is provide advances against business to business accounts receivable.  So, instead of having to wait 30, 60 or 90 days to be paid by your customers you can receive payment today for the vast majority of the value of your invoices.  

For our prospective client this means that through Fast A/R Funding's debtor finance product he can get up to 90% of the value of the money due him from Apple today instead of having to wait 30 days.  The prospective client needs this money to invest in further markeing the app or to begin development of a new app. Instead of having to raise equity by bringing in a partner and selling a part of the business the entrepreneur can just access the trapped working capital in the biggest asset the company has, the outstanding invoices.  

Debtor finance has been around for hundreds of years but what is different about Fast A/R Funding is that we have developed our own software that puts the entire process online.

Because of our online process we can get prospect companies money in as little as 48 hours.

Click on the link below to learn more about our company or give us a call to learn more.

888.833.2286

How is Account Receivable Factoring vs Asset Based Lending - 3

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How is account receivable factoring different from Asset Based Lending?  Part three in our series.  

Click the following links for the first and second parts:

Part 1    

Part 2  

In the third part of our series we will be discussing how you can decide which financial tool will better fit your business depending your situation. This question can become very complicated so I will try and limit the variables to the four most important criteria of your business.

You need to ask yourself some basic questions? 

• What are the assets of my business that I have the biggest investment in?

        If your answer is accounts receivable, and not inventory or machinery and equipment or real estate then factoring may be the best solution.  If your firm has large investments in inventory, machinery and equipment or real estate it may be a better fit for asset based lending.  

• How much and of what quality is the financial information available on my business?  This includes years of operation and readily accessible information on the financial performance of the business.  

       If your answer is that your business has been around for several years and you have a strong accounting department then asset based lending may work for you.  If your answer is that you are busy growing your business and haven't been able to build a strong financial infrastructure than account receivable factoring may be your best fit.

When you have answer to these four simple questions you are probably on your way to making a good decision.  Make sure to get the advice of other business people you respect who have experience in asset based lending or account receivabe factoring and your CPA.

To learn more about electronic account receivable factoring click the button below.

How is Invoice Factoring different from Asset Based Lending - Part 2

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How is Invoice Factoring different from Asset Based Lending - Part 2.

This is the second installment in a series of articles that explain the difference between invoice factoring and asset based lending.  

Click here for a link to the first article. 

This second article will focus on the basic characteristics of an invoice factoring facility.

The main distinction between invoice factoring and asset based lending is that a factor will have more control over the accounts receivable they advance against.  A factor will typically book each invoice in their system and will require that the customers of its' clients pay them directly.  

By having this increased level of control factoring companies can generally document and fund a new facility faster than asset based lenders.  Because asset based lenders have less control over the assets of their clients they have to have things like, loan covenants, field exams and require CPA prepared financial statements. These requirements take time and cost money.  In my experience it takes between 30 and 90 days for an asset based loan to be funded where an invoice factoring facility can be funded in a matter of days. 

The following is brief list of the most important aspects of an invoice factoring facility:

• Size - Facility sizes range from $50,000 to hundreds of millions.
• Collateral - May be limited to cash and accounts receivable but could also include all business assets.
• Recourse -  Full personal guarantees typically required by all non-institutional owners. 
• Customer Notification - Customers know factoring companies are involved.  Customer usually receive an assignment letter that notify them to pay the factor directly and invoices are labeled "due and payable to a factoring company"
• Financial Covenants - Typically none.
• Reporting - Clients will be required to report to the factoring company any issues that could affect the accounts receivable the factoring company has advanced against.
• Pricing - Pricing fluctuates greatly between 1% and 4% for every 30 days an invoice remains unpaid.

To learn more about online, electronic invoice factoring click the link below.  

How is Factoring Receivables different from Asset Based Lending?

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How is Factoring Receivables different from Asset Based Lending?  Part 1

I just got off the phone with an investment banker who wanted to understand the differences between factoring receivables and asset based lending. I thought that this question would be a good basis for a series of blog posts.

In the broadest sense of the term, asset based lending is the category of commercial finance of which factoring receivables is a subset.  Asset based lending is a type of finance where the structuring and underwriting of a loan is based on the expected liquidation value of the business assets being leveraged.  

When most people use the term, asset based lending, they are referring to a type of revolving credit facility where a business borrows against the liquidation value of their accounts receivable, inventory, property plant and equipment and sometimes intangible assets like intellectual property.  

Factoring receivables is different in that the company is typically only able to generate near-term cash flow by accessing the value embedded in their accounts receivable.  

To learn more about factoring receivables electronically and paperlessly with Fast A/R Funding click the link below.

The following is brief list of the most important aspects of an asset based lending facility:

• Size - Facility size for asset based lendings vary from as low as $500,000 to as high as several billion dollars.
• Collateral - All business assets
• Recourse -  Depending on the financial strength of the corporate borrower, the lender may, or may not require the personal guaranty of the majority owners of the business.
• Customer Notification - The borrower's customers are not notified that the lender has taken a security interest in the assets of the business.  Customers of the borrower are asked to make payment to the borrower at a PO Box controlled by the lender.  
• covenants - Most asset based lending facilities have tight loan covenants including minimum cash flow, and maximum leverage.
• Reporting - Borrowers are expected to submit borrowing base certificates at least monthly, that summarize the current value of the company's assets.  Borrowers are required to supply the lender with monthly financial statements.  Most lenders require quarterly field exams where the lender's personnel visit the borrower to examine the books and records.
• Pricing - Annual percentage rates anywhere between LIBOR plus 2 percent to as high as 30%.