Business Factoring

The primary advantages of “Business Factoring” for small to medium size companies over lending institutions is that factoring facilities are much easier and practical to put in place.

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While banks typically need a history of profits and audited financials, 1st Commercial Credit provides factoring facilities with much more flexibility with regard to documentation, credit, and record keeping issues. In some cases, companies that qualify for a bank credit line today, may find themselves with inadequate funds for growth in the near future.

1st Commercial Credit can accommodate businesses that have outgrown their bank line by (a) buying out the bank credit line using the receivables to leverage out the buyout or (b) the bank will subordinate the accounts receivable to us in order to provide a factoring arrangement with the prospective client.

For the most part, factoring companies establish credit limits by evaluating your customer’s ability to pay, not yours. Your factoring credit facility will be virtually unlimited for future growth and will be based on accounts receivable owed by credible clients.

Factoring of Businesses is available in days, not weeks.

The process is simple with a more basic credit analysis focusing on the quality of the account debtors (your customers). Most funding transactions (depending on the industry) may take only 3 to 5 working days. At 1st Commercial Credit, we make receivable financing easy to obtain with minimal paperwork. This financial solution involves very little underwriting. Our clients can enjoy the benefits of our prompt service and begin to use their funds within days of completing an application.

Using Accounts Receivable as Collateral

Businesses that sell on credit terms have a hidden asset that most owners do not realize can be used for collateral. 1st Commercial Credit specializes in collateralizing and financing accounts receivable. The receivables are pledged as collateral and the business may draw cash against the eligible accounts receivable at any time. Factoring, also known as business receivable financing is not a loan, so there is no need to make payments or create debt to your business.

Business Qualifications for Business Receivable Financing

Our financing programs can accommodate companies with seasonal or uneven sales patterns or start-up operations with no financial base to rely upon. Any business can qualify for receivable financing if it generates sales on open credit terms to customers with financial credit strength. Most of our clients are trying to find a solution to finance their growth or whose past earnings will not justify a traditional loan or credit line increase.

What Industries Qualify for Receivable Factoring?

Every industry is evaluated differently because no industry invoices the same method. Not all factoring companies accept every industry. As a rule of thumb, your business must sell to a good credit worthy account debtor (customer), a receivable or invoice that can be verified or has an acceptance (signed off) by the account debtor. Receivable financing is available to all industries that provide services, or deliver products to commercial accounts. The sale must be "final sale" with no contingencies or disputes. The service or product must be completely delivered in order for an invoice (receivable) to be eligible for funding.