What is A/R Financing - Factoring
It's no secret that cash flow is the lifeblood of every business. Successful businesses require consistent cash for ongoing operations and additional cash reserves to fund growth opportunities. Maintaining sufficient cash can be difficult for new businesses and businesses experiencing rapid growth. A/R Financing - Factoring can provide immediate assistance by turning your accounts receivable into cash.
With accounts receivable factoring, otherwise known as invoice factoring, your customer’s ability to pay, not yours is considered. The biggest attraction to factoring is not being held captive by slow-paying customers.
Accounts Receivable Factoring lets you turn your invoices into cash that can immediately be used to meet payroll and other expenses such as fuel.
Benefits of Invoice Factoring
- Speeds up collections
- Replaces your credit department
- Assists your collection efforts
- Posts your collections
- Access to Daily Online Reporting
- Allows companies to achieve full growth potential from new profitable sales
- Provides cash availability to start-up companies with a limited operating history
- Generates immediate cash to help companies achieve increased profits
- Allows clients to take purchase discounts
- Can be a substitute for giving up equity or bringing in partners, losing ownership or control
- Client obtains full benefit of credit department at no cost, hence decreasing bad debts and increasing profitability
- Allows companies with large concentrations to one customer to have credit availability
- Takes the worry out of financing and allows you to focus on your business
- There are no restrictive covenants on the balance sheet and income statement which would restrict the company from seeking new sales
- You pay for only those invoices that are factored with no minimum requirement
Accounts Receivable Factoring vs. Traditional Bank Line of Credit
- Accounts Receivable Factoring focuses on the credit worthiness of your customers, not your company.
- Unlike a typical bank loan, factoring clients are not subject to tightening credit availability due to credit cycles, economic volatility or market fluctuations.
- Traditional bank loans have restrictive covenants on net worth, leverage, profitability, dividends and other restrictions, which inhibit sales growth.
- Typical bank loans focus on the strength of the balance sheet, the profit and loss statement and cash flow of your company.
- Factoring de-leverages your balance sheet.
- Getting setup to factor with is quick, with no long approval process.
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"Troy Financial was there for us in time of need for a CAPEX on our equipment needs. Thank you to the staff and level of professionalism in which they handled this timely purchase."
Tommy, International Aviation Executive
(Greater Atlanta Area)
