Invoice Factoring Facts

Accounts receivable funding is a widely used financial solution for all types of businesses that extend credit terms to their customers. Here are some common questions our customers ask.

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1. How is accounts receivable funding different than a loan from a bank? When making an accounts receivable funding decision, we will focus on the creditworthiness of your customers while banks will focus on your company’s financial history and cash flow. Accounts receivable funding is not a loan, therefore provides you with less debt on your company’s balance sheet. we can make a quick funding decision, while banks may take weeks—even months—to approve a loan.

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2. Will my company be eligible for accounts receivable funding if it has a bank loan or line of credit? If a bank has a lien on your company’s accounts receivable, you should let us know right away. We will ask the bank to subordinate that lien. Some banks will accommodate the request and others may decline depending on your circumstances. Our number one referrals come from loan officers willing to help out the client in cash flow needs. They are very familiar with this kind of interim financing. The other alternative is to pay off the loan if there is plenty of receivables to leverage the buy out.

3. My company owes back taxes. Can I still apply for accounts receivable funding? Tax problems are handled on a case-by-case basis. Please let us know immediately so that we can discuss a lien subordination with the tax entity or request a payoff amount. We can use the initial funding to payoff the tax entity if there is enough leverage.

4. If my company is considering bankruptcy, is accounts receivable funding still an option? Please note that Chapter 11 is the only form of bankruptcy that we will consider.

5. What information will you need from my company to begin the accounts receivable funding process? A short application, your company’s most recent accounts receivable and accounts payable aging reports, Articles of Incorporation or d/b/a/ filing, a master customer list and a sample invoice.

Small Business Factoring Receivable Financing

6. Which customers would be good candidates for accounts receivable funding? Usually 80% of your business comes from 20% of your customers and these would be the most likely to factor, however, we will factor 100% of your customer base so long as they are credit worthy. In order to approve your customer base, we will need their names, addresses, phone numbers and the amounts of credit desired for each client. This will save you time when submitting invoices to us.

7. Can you purchase only a portion of my company’s invoices or one customer? Yes, so long as it is not a one time deal.

8. How long does it take to receive the first funding? The initial funding takes between 3-10 business days after we receive your signed agreement. If you wish, you can send some invoices to be funded with the signed contract in order to expedite your funding. After the initial funding, your company can receive funds within 24 hours after invoice verification.

Invoice Factoring Line of Credit

9. How much of my company’s accounts receivable can be funded? We can fund up to 100 percent of your company’s creditworthy accounts receivable and depending on the industry, we may fund up to 92% advance.

10. What should I do if my customer mistakenly sends the payment to my company? The answer to this question will apply to any factor you deal with. This is very common especially with the first initial funding. If this occurs, the check must be sent to us immediately. Your company should never deposit invoice checks that were already purchased by a factor. Your customer will be notified to pay us directly in the future.

11. How can I be certain that your company will treat my customers well? The last thing we want is for you to lose a customer. We are not a collection agency. We will never harass your customers for money. Maintaining your customers’ goodwill and confidence are of utmost importance to us!

Accounts Receivable Factoring Accounts Receivable Financing

12. What should I tell my customer when they find out I am financing my receivables? Should an account debtor (customer of our client) who is unfamiliar with factoring question the notice of assignment and ask what is going on, the business owner only needs to tell them they have chosen to use a company to manage and finance their accounts receivable.