Factoring

Factoring essentially allows you to get an advance on your accounts receivable. If you typically allow 30, 60, or 90 days for your clients to pay their invoices, you could be putting your expenses on hold. Late client payments can delay your plans to get new materials, pay utilities, or hire new staff.

Factoring Benefits

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Get funding, even with bad credit.

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Factor as often as you need to without reapplying.

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Manage cost of cash without impacting your credit score.

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Immediate access to working capital.

What is Factoring?

Instead of waiting a month or more for your client to pay, you can factor those invoices and get cash right away. When your client is ready to pay, they send payment directly to the factoring company. After a small fee, the remaining amount is forwarded to you. There’s nothing for you to repay and you don’t need a high credit score to qualify. As long as your client has a solid history of paying on time and in full, you can get the money you need by selling invoices, purchase orders, or contracts.
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To get an idea of how factoring works, imagine you have a client that owes your company $100,000 for products you produced…

Instead of waiting for them to pay their invoice, you can sell that invoice to a factor. If the factor agrees to advance you 75% of the invoice, you get $75,000 of working capital right away. When the client pays the invoice, they send the factor the full $100,000. The factor gets back the $75,000 they sent you, leaving $25,000. The factor’s fee for advancing the money to you, in this instance, is 3%, or $2,250. Therefore, with these terms, you receive a second payment of $22,750 from the factor, for a total payment to you of $97,750.

A similar short-term business loan could commonly come with fees of 7-12% or more, depending on the circumstance of your business. This is a general example and factoring fees may vary. Sell one large contract or several smaller invoices at once. You aren’t required to pay back the factor unless your client is unable to pay the invoice.

Traditional and non-traditional lenders available to you

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Fastest time to funding through Platz Capital

Materials

If you have new orders, but not enough materials to fill them, you may be reliant on your outstanding accounts receivable. But just because your regular client is slow to pay doesn’t mean the new client will be happy to wait. Instead of letting the orders pile up, use factoring to get the materials you need today.

Bills

Water, electricity, rent, and payroll won’t wait on hold just because your clients are slow to pay. Avoid late charges and negative credit reporting. Use factoring to get the cash you need and take care of debt before it becomes a problem. You’ll be able to take care of your immediate business needs without incurring long-term debt.

Opportunities

When new opportunities present themselves, you need the financial capability to take advantage of them before they pass you by. Factoring allows you to speed up your cash flow, activating your plans, allowing you to seize opportunities to expand with bigger clients, new resources, and more personnel.

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Step 1 – Preapplication

This is the step the banks miss. You’ll give us simple information that will help us position you for funding.

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Step 2 – Financing Selection

Our team sources and presents offers along with the critical information you need to make decisions.

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Step 3 – Closing

We facilitate the process from final selection to closing to create the smoothest process possible.

BEGIN THE PRE-QUALIFICATION PROCESS

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F.A.Q.

Q. How does the factor get paid?
The factor receives payment directly from the client that owes the invoice or purchase order. Anything over the factored amount will be passed on to your company, minus a small fee for the service. All it requires is a notice to your clients for payments to go to the new company.
Q. Can I use factoring if I have bad credit?
Since factoring depends on your clients’ credit, not your business credit, you can use factoring no matter what your credit score. This makes factoring ideal for new businesses or those undergoing credit repairs.
Q. For how much can I sell my accounts receivable?
Factors pay a percentage of what the total account is worth. What percentage depends on the client’s credit, how many accounts you factor, the term length, and your industry.
Q. How much does factoring cost?
Most factors charge a very small fee – often less than 5% of the total amount financed. Make sure you’re aware of any additional fees in the factoring agreement before you sign.