ACCOUNTS RECEIVABLE FINANCING
Also known as factoring is the purchase of accounts receivable for immediate cash. Factoring gives businesses the power to ensure growth without diluting equity or incurring debt. After invoices are submitted and verified, they are funded within 24 hours.
How it Works:
Once you’re signed up as a Client, it’s easy to exchange your receivables for immediate cash. It works like this:
1. The funding source establishes a credit limit on the customers you submit
- Tell us their business name, address, and amount you need
- The funding source pulls credit and establishes a limit without delay
2. You complete your business transaction as usual
3. You send or deliver your invoices directly to the funding source
- Use simple forms to summarize and calculate the amount
- Attach the proof of delivery you usually send to your customer
4. We verify that product was received or service performed
5. You receive your cash from the funding source
- The funding source wires funds into your bank account within 24 hours
- The funding source retains their agreed fee for service
6. The funding source forwards your invoices to your customers and they pay them directly.
It’s really that simple. And you can monitor the status of all your transactions online 24/7, at no extra charge.
How factoring Can Benefit YOUR Company:
The benefits of factoring really boil down to adding profit to your bottom line. Before you factor, make sure you can take advantage of the features and leverage them into value:
TAKE ON ADDITIONAL BUSINESS
Most of our clients can do more business if they have better cash flow. How this works depends on your industry and your market. Some real examples are:
- Improving or increasing marketing
- Saying “yes” to customers who demand credit terms
- Investing in income-producing assets–people and equipment
- Eliminating supplier constraints
- Shifting manpower from collection to marketing and production
Many of our clients actually reduce expenses by outsourcing credit and administration to the funding source, and by leveraging their healthy cash position. The most common ways include:
- Eliminating bad debt
- Reducing collection and administrative expenses
- Receiving cash discounts from suppliers
IMPROVE YOUR FINANCIAL CONDITION
Exchanging invoices for cash enables some businesses to “get current” or reduce strains caused by tight cash flow. It also improves their own credit rating. Here are some examples we frequently see:
- Staying current with suppliers and creditors
- Establishing payment terms with suppliers, further improving cash flow
- Meeting regular payroll obligations
- Bringing payroll taxes current
How can YOUR company benefit? Every company has a unique situation. Before signing up to factor, it’s important to estimate how our services can increase your business, reduce your expenses, and improve your financial situation. Call us or request information and we can help you answer these important questions.
Purchase Order Finance is short term funding used to finance the purchase or manufacture of specific goods that have been presold by the client to its credit worthy end customer. Funding entails issuing letters of credit or providing funds that allow clients to secure the inventory they need to fulfill customers orders.
What is Purchase Order Finance?
Purchase order Funding can be used by Manufacturers, Importers, Exporters, or Distributors for:
- Issuing Letters of credit
- Payment to third party suppliers for finished goods
- Raw materials
- Direct labor
- Shipping, packaging, inspections, etc.
Primary Reasons why Purchase Order is Utilized in Financing Transactions
- Insufficient Capital
Company has solid export / import or domestic sales but does not have the working capital to complete the transaction or continue to grow.
- International Expertise
Company doesn’t have the expertise and experience to structure and complete the import or export properly. Even established international clients will use our expertise to make a transaction safer.
- Transfer of Foreign Risk
Clients and/or clients’ vendor (on exports) transfer to the funding source the risk of payment by the foreign buyer.
- Alternative Financing Versus Giving Away Equity in a Fast Growing Company
The funding source provides working capital where banks can not because the company’s balance sheet or collateral will not support sufficient borrowing. An equity placement would force the owners to give away a high percentage of the company.
Often clients need a quick response in order to get or keep a sale. The funding source can quickly do its due diligence and review the facts of the transaction. There are no committees, lawyers or other elements that slow the decision process down.
- Enhance Profits
Clients can grow more quickly by having the capital available to do more business. Clients brokering goods can become principals thus increasing their margins. Our clients can expand their margins, save on various costs and increase supplier credit extended to them.
- Disguise our Client’s Identity
Our clients that are middlemen need transactions secured in such a way that the end buyer and manufacturer do not become acquainted. In these situations the end buyer typically issues a letter of credit to our client, and we issue a letter of credit to the manufacturer.
- Operational Support
If desired, the funding source can, to a great extent, become the international operations area for a company, thereby allowing a cost savings and providing expertise to international transactions.
Your business can experience the many benefits of leasing– it is affordable, cost effective and saves you valuable time and effort.
Top Ten Reasons Why Leasing Makes Dollars (and Good Business Cents) for You!
- Affordable, fixed monthly payments
- 100% financing, lease-to-purchase plans
- $1 buyout at the end of the lease term
- Simplifies capital budgeting
- Improves cash flow management
- Keep your cash! Pay monthly, as your new system performs a service for you
- It’s easy to add-on equipment and system upgrades with our “Master Lease”
- It’s easy to apply – submit a one page application form
- It’s convenient – you never have to leave your office!
- Potential tax benefits (consult your tax advisor)
LAST RESORT PROGRAM
Our Last Resort Program will work with clients of ALL INDUSTRIES that have already been declined by A, B or C-Credit leasing programs. This program allows the lessee the following possibilities:
Lease terms for up to 62 months with purchase option at end of lease of 10% or FMV
Security deposits-if large-to be paid partially by pledging additional collateral in the form of free and clear equipment. All transactions will have a minimum of 5% as security deposit, owner operators 20% as security deposit and carriers 10% security deposit.
Co-signer: A co-signer is allowed in cases where the lessee’s FICO score does not fit the minimum FICO score of 560 required by this program. Co-signer does not have to be involved in the business. Co-signer should be willing to present two years of tax returns and a personal financial statement.
This program requires a minimum of 16% of the equipment lease as up-front payments and in the worst case scenario a maximum of 35% of the equipment lease amount as up-front payments. Some of these up-front payments are in the form of a security deposit which will be returned at end of lease.
- To acquire real estate or a business
Commercial lending is one of the most important yet least understood ways to get a business off the ground.
While many people save and try to invest their own money when they start a business, this is rarely the best way to get off the ground. If for any reason at all the business goes sour, you could end up losing your entire savings. Plus if you take out personal loans to finance the business you could see your credit rating destroyed. With a poor credit rating it will be nearly impossible for you to get a good mortgage, acquire credit cards or have any way to deal with financial emergencies.
You can often use leasing in order to finance the equipment your business needs to survive, but in many cases you will need a mortgage if you are trying to acquire property or an existing business. That is when commercial financing comes in handy.
When you take out a commercial loan, however, the loan is in the name of your business. Should things go wrong it is only the business that will suffer. You can always start a new fresh business. You can’t recover from the damage a personal loan can cause your own to financial reputation.
The Different Types of Commercial Loans
It is important to know the different types of commercial loans available. In this summary we will try to give you a good feel for the common loan terms so that you can be an educated consumer. Most of these terms assume that you are purchasing real estate or an existing business.
Acquisition – An acquisition loan is used to acquire commercial property using the proceeds of the loan. This can include improved lots to already constructed and operating property.
Acquisition and Development – These types of loans are used to purchase and develop real property so that it increases in value. In other words you purchase a vacant lot and then build a house on top of it.
Asset based – This type of loan is when collateral and other assets are put up for security. If you default you lose your collateral.
Bridge Loan – A bridge loan is a loan that is used for a short duration of time until permanent financing is put in place. Bridge loans are a perfect solution to a timely acquisition or business opportunity because they allow a purchaser or investor to act quickly. These loans can be used for acquisition, buy-outs, foreclosures, cash out and construction purposes.
Construction – A construction loan is a loan used to construct a building or other improvements of real property, with the land and improvements as collateral for the loan. Construction reserve accounts are generally maintained to disburse the money as the construction progresses.
Mezzanine – A mezzanine loan is a loan that is subordinate to a primary lender. It involves debt paid back at the time of sale or refinance with an equity ownership piece given to the lender as an incentive. Loans on the property or the business with equity in either ownership or warrants in the company are used to buy valuable property or business or buy out an existing partner.