Blog articles discussing factoring companies, factoring loans, invoice factoring and all things related.
As capital markets advisers and small business advocates, we are in communication with business owners on a daily basis. For small business owners, cash flow is critical. In a recent example, we spoke with a supplier of art frames and pieces. Their major account, Panda Restaurants, has been steadily increasing their orders and while this was a welcome arrangement, it was creating a cash flow problem for the small business owner.
The company had current accounts receivable between $10,000 and $25,000 per month – much too small for traditional banks to be interested. They specifically stated they were interested in a working capital line of credit versus a loan.
After a brief conversation, we introduced them to the perfect factoring company for their business. Factoring your accounts receivable, or invoice factoring as it is also referred to, is a buy/sell agreement and not a loan. The factor will “purchase” the invoice for a period typically up to 90 days. The client is able to take a cash advance on the face amount of the invoice. For example, if you have a $1,000 invoice out to a customer, the factoring company will advance 80% (more or less depending on the situation) allowing you to use $800 of that cash on day one. Once the $1,000 invoice is collected, the advance is repaid along with the $200 balance minus the factoring fees assessed.
Factoring companies have provided invoice factoring for over 100 years. It is the simplest way to cash quickly for your business capital financing needs. If your business could use a boost in capital to fund growth, give us a call.
To your success!
Patrick Zazueta | Founder
Huntington Coast Capital, Inc.