Factoring Kathleen Mandig 2016-12-16T03:26:06+00:00
What are the Benefits of Factoring?
- It’s a flexible funding program that increases as you increase your sales
- It gives your business and increase in working capital without borrowing money, giving up equity or tying up your business (or personal) assets.
- It allows you to take advantage of vendor discounts and extend credit to customers on large orders.
- This allows your business to consistently meet increasing demand.
- Access funds for payroll, taxes, equipment or inventory
What is Invoice Factoring?
Receivables funding (accounts receivable financing) improves your cash flow by providing an immediate advance of cash against the value of your outstanding invoices. Accounts receivable funding is not a loan; it’s an advance against your customers’ invoices in order to secure immediate working capital.
How Does It Work?
Accounts Receivable Financing
Equipment financing enables you to acquire the equipment and technology your business needs without using up your working capital or business credit line. In addition to preserving cash flow, leasing offers tax advantages, helps build and maintain good business credit and allows your business to remain competitive and efficient. Almost any kind of equipment your business needs can be financed, including medical and dental, commercial vehicles, industrial equipment, computer hardware and/or software, restaurant and catering equipment, office furniture, telephone systems and more.
For leases less than $100,000, the client provides LendSpark with a simple, one-page credit application and information regarding the cost and type of equipment. Leases greater than $100,000 generally require a full financials package. Many times credit approval will occur that business day, and funding usually occurs within 24-48 hours after delivery and acceptance of the equipment.
While not a loan, factoring is credit extended to your company based on your assets, cash flows, and credit history. The credit history of your customers is also a critical evaluation criteria. Typically, you need to have receivables of $50,000/month or more for LendSpark to present a receivables funding option. A company sells its invoices at a discount to their face value when it calculates that it will be better off using the proceeds to bolster its own growth than it would be by effectively functioning as its “customer’s bank.”
“Principle benefit is giving your business an increase in working capital without borrowing money, tying up your assets, or giving up equity.”
The Benefits of our Accounts Receivable Funding Service
Principle benefit is giving your business an increase in working capital without borrowing money, tying up your assets (either business or personal), or giving up equity. This boost to your cash flow positively impacts your profitability, allowing you to:
- Take advantage of discounts on bulk purchases and early payments with your suppliers
- Stop offering early payment discounts to customers
- Extend credit to customers on large orders
- Pay back taxes and liens and fund payroll
- Access to the necessary funds for growth
What is Invoice Factoring Management?
In addition to the cash that we provide, we can also free up valuable management resources. We manage your accounts receivable by going after and collecting outstanding invoice payments from your customers on your behalf so that you have more time to concentrate on generating new business. We will prepare and send out statements, telephone all your customers, collect payments for you, and maintain professional and detailed accounts of your transactions.
Accounts Receivable Financing
- Accounts receivable financing boosts your cash flow by providing an immediate advance of cash into your business against the value of your outstanding invoices
- When you raise an invoice, we can release up to 90% of the value of that invoice within 24 hours, with the remaining 10% being paid to you, less a small service fee, once we receive payment from your customer.
- Your business has access to ongoing cash flow funding linked to your sales, so as your business grows so does the amount of funding available to you
- We save you valuable management time by preparing statements, communicating with your customers, collecting payments for you, and maintaining professional and detailed accounts of your transactions. This saved time can be spent driving business forward.
- By working with a receivables funder, you will see a significant reduction in debtor days and improvement in cash flow, resulting in valuable management time that can be spent driving business forward.
- Our receivables funding facility can also make it possible for you to get discounts on bulk purchases as well as early payments with your suppliers, thus increasing your businesses’ overall profitability.
LendSpark offers a wide variety of solutions and our experienced professionals will present you with the best fit for your needs, budget and business profile.