Receivables
Funding Process
The
first step in the funding process is getting your account
established with us. This is a relatively quick and painless
step. We have a factoring application that normally takes
around 15 min to complete. Once you complete it and fax
the required documentation which normally consists of invoices
and an accounts receivable aging report we will send your
application to underwriting. Our in house underwriter make
sure we have all the required documentation drafts the contract.
Once terms are acceptable and the contract is signed we
are ready to start factoring. This whole process can take
anywhere from 3-5 business days.
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Create
Invoices
Once your company
has delivered goods or services to your customer you can start selling
us invoices. You can either send the original or fax copy of the
invoice to us to process. The requirement of an original invoice
is dependant upon the type of industry you service.
Example:
Trucking companies can factor invoices once their loads have been
delivered. The trucking companies debtor almost always requires
an original invoice and bill of lading before they will remit
payment. Therefore the trucking company must overnight the original
invoices with backup documentation to our operations center for
funding the following day.
Funding
the Invoices for Factoring
Once
your account is established we wait for you to sell us your invoices.
When you need cash just send over your invoices to be factored.
Our operations staff will take a couple minutes to verify the
invoice and the creditworthiness of your customer. If your invoices
make the wire deadline you will be funded that day.
Note:
Invoices do not need to be sent in for factoring the day they
are created. You can age or seasong the receivable up to a month
with the goal of lowering your factoring fees. The factoring
fees start the day your invoice or scheule of invoices was funded.
Example:
Your top customer usually pays on day 45 even though you have
extended them 30 day terms, however your business doesn't need
funding immediately. You can season the invoice for 15 days
and then send it to be factored. If the invoice pays on day
45 your factoring fee will be half of what they would have been
if your had factored it immediately.
Credit
Approval
All invoices
must have credit approval which is a quick and necessary process.
It is designed to protect the customer from incurring too much
bad debt. Our processing department will normally run a Dun and
Bradstreet or similar credit check on the detor. Once approved
a credit limit is set and the credit it updated on an ongoing
basis. We protect you as much as possible from the threat of bad
debt.
Funding
Advance
Once credit is approved you will be wired the advance. The advance
is usually between 70% and 90% of the original invoice amount.
You can then use this money for payroll, vendors, taxes, or business
operating capital.
Collections
The Factor does the administrative work of processing eventually
collecting payment on the invoice. A notice of assignment is typically
sent to the account debtor instructing them to remit payment to
the Factor when the invoice is due. Once the payment comes in
from the debtor and the check settles the transaction is closed.
Reserve
Release
Once the transaction is closed the reserve, which is the percent
not funded minus the factoring fee will be released back to the
company. Now you are ready for the process to happen all over.
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