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Factoring - or Accounts Receivable Financing

The Benefits

The Details

Capital Consulting Group

Getting Funded



Factoring - or Accounts Receivable Financing


What is factoring?
Accounts receivable financing - also called factoring - is the process of selling commercial invoices at a small discount, to get the cash you need quickly and easily. This process can take as little as 24-48 hours. And the factor waits to receive payment from your customer.

Factoring is NOT a bank loan. So there are no lengthy bank application forms, no bank approval committee, no collateral, and no interest payments.

Factoring is NOT a new financial vehicle. Businesses have prospered using factoring since the time of ancient Rome.
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Who uses factoring?
Factoring is a very old financial tool used by Fortune 500 companies like: Wal-Mart, IBM, Georgia-Pacific, Honeywell, Scott Paper and Shell Oil.

But factoring can be a good cash flow vehicle for almost any company with commercial accounts receivable, that needs more stable cash flow to pay their bills on a timely basis. Immediate and urgent commitments like payroll, taxes, or materials and extra staff to capitalize on valuable new projects.
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Is factoring a good financial vehicle for my company?
90% of a small company’s working capital can be tied up in accounts receivable. And limited access to cash resources is a major cause of business failure.

Factoring can support your business growth if you’re occasionally short of cash, or if you’ve lost out on solid deals waiting to get paid for outstanding invoices. This wait is like extending a 30-60-90 day interest-free loan.

Capital Consulting Group can help you evaluate the pros-and-cons for your business. We’re independent from any one factor, so we represent your business interest.
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The Benefits


What are the benefits of factoring?
Here are a few things factoring can do for you:

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What if my credit isn’t great?
That’s not an issue. A factor reviews your customer’s credit rating, because their accounts payable department makes the payment directly to the factor. So there’s no credit check on your business.
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Can factoring help protect, build or re-build my credit rating?
Yes. Factoring can provide a good resource to help protect, build or re-build your credit. With more stable cash flow your bills get paid on time. And you can limit the amount of your bank credit line that’s accessed each month.
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Can I still work with my bank, even if I decide to factor some of my accounts receivable?
Absolutely. In fact, many of our clients use a cash flow strategy that blends their bank line of credit with factoring. They decide each week or month how much of each resource to utilize.
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Do I have to sign a binding contract?
No. We work with many factors that don’t require any long-term contracts, or monthly minimums.
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Can I control the number and dollar amount of the invoices I sell?
Absolutely. We work with you to determine how best to maintain maximum flexibility with no commitments. We run a cost-benefit analysis to make sure you’re working with the best factor to meet your individual needs.
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What if I’m considered a small business?
That’s OK. We work with a variety of factors in order to satisfy almost any need. We work to structure a factoring deal with no minimum requirements or long-term contracts. It’s my job to pair you with the factor who best meets your individual needs.
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Do you fund most types of businesses?
Yes. Because we work with so many factors, we can provide a resource for almost any type of business.
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The Details


How long does it take to get funded?
The funding process can be completed within 24-48 hours.
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Can you give me an example of how it works?
Factoring works in three easy steps. Step one: you sell an invoice to a factor. Step two: within 24-48 hours the factor sends you 70-80% of the dollar amount of the invoice. They hold back a reserve of 20-30%. Step three: when your customer pays the invoice the factor sends you the remainder of the reserve less a small fee.

Think about a computer company that’s just completed $100,000 of software development for a computer manufacturer. The software company decides to factor the invoice, instead of waiting for payment which could take 90 days with this particular client. The software company would receive $70,000-$80,000 within 24-48 hours. And they would receive the remainder of the reserve less the factor’s fee when the computer manufacturer remits payment on the invoice. Then they can use the cash to fund a marketing campaign for a new product launch, or to pay off some outstanding debt.
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What’s the difference between rate and effective rate?
“Effective rate” is one of your most important questions when evaluating a factor’s proposal. Many times a factor will quote a “base” rate. And you’ll need to calculate the “effective” rate, which represents the total cost by including any additional fees. Some examples are: processing fees, minimum monthly fees, term agreements, fee periods longer than 10 days, batch accounting rather than individual invoice accounting, limited options for aging invoices, requirements that all invoices must be factored, tack on fees for electronic transfers, etc.

Don’t worry if it sounds complicated. A cash flow strategist like Capital Consulting Group can help you compare apples-to-oranges price quotes. So you always base your decision on the effective rate.
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Will my customer know that I’m factoring my invoices?
Yes. A factor works closely with your customer’s accounts payable department. And most are already familiar with the value of factoring, as well as the payment process.
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Capital Consulting Group


What’s the benefit of working with Capital Consulting Group?
You’re my client. I represent you, not any particular factor. My mission is to help you focus on what you do best - growing your business. So I’ll present you with a variety of options from a variety of factors. And help you make the best decision.

Time is money. I’ll free up your time by providing research, expertise, and an expert recommendation. Google “factoring” or “accounts receivable financing”, and you’ll get 800,000 hits. Almost every factor uses different terminology, and different rate structures. They fund different size companies, and different types of businesses. Some only fund construction, and others never fund construction. The evaluation process can be confusing and time consuming.

My job is to help you understand the pros-and-cons of factoring, and when it makes sense for your business. I’ll listen closely to understand your individual needs. And then I’ll pair you with the factor best positioned to support your long-term growth.
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What’s Your Background?
With 20 years of financial services expertise, I understand your business. I listen carefully, and then work with you as your cash flow strategist to help you achieve long-term growth. I’ll evaluate a variety of factors and competitive proposals to determine the best plan in the marketplace to best suit your needs.
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Do I have to pay a fee to Capital Consulting Group?
No. Our consulting, research and cash flow strategy services are provided at no charge to you. If you choose to use a factor to satisfy your cash flow needs, then they will compensate us.

Remember, you are a client of Capital Consulting Group. So your long-term success is my primary concern, as I evaluate a variety of factors on your behalf.
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Getting Funded


How long does it take to get funded?
The funding process can be completed within 24-48 hours.
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How do I get started?
Respond today for your free evaluation. Or send a note using the contact page. You can also call me directly using the telephone number on the contact page.

Rest assured you won’t wait more than 24 hours for a response.
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