If you have invoices for products and services you have already delivered and are just waiting to get paid, we buy those types of invoices. Factoring is an option if you sell to business customers, not consumers. And, the invoices must be good, not bad debt. In other words, there is no reason to expect the invoices will not be paid in time. We are not debt collectors.
Your personal and company credit aren’t very important to this process, in fact they mean almost nothing. What does matter is that your business customers are decent-size companies, not fledgling startups. They don’t necessarily have to be big public companies, but we need to be able to get comfortable that they are not going out of business tomorrow. We provide factoring lines to companies in all sorts of industries – staffing, medical equipment, law firms, oil and gas companies, retail, construction, miscellaneous service providers … we even provide factoring solutions to non-profit organizations, which very few factoring companies will do.
How factoring works
Invoice factoring is also referred to as selling accounts receivable because, well, that’s what you’re doing. You are selling your accounts receivable to us. We advance you a very high percentage of the face amount of the invoice and then when your customer pays the invoice, they pay us. We net out our fee and immediately send you the residual amount you are owed. The process is very straight forward and well-recognized. Large public companies often factor as part of a very large commercial credit line.
Why companies factor
Companies factor invoices for all sorts of reasons. One of the main reasons, of course, is to get cash today in order to grow. Growing companies need cash – there’s no arguing that point. You can’t make payroll or take advantage of opportunities with your money locked up in invoices that take a long time to pay off. Factoring also helps you manage your accounts receivable. In some ways, you are choosing to outsource a portion of that process to us and we are pretty good at it. We may be able to help you’re your customer’s credit issues before they become your problem.
How much does it cost?
Factoring rates vary tremendously based on the number and size of invoices you are selling each month. Bear in mind that factoring is not a loan. We are buying an asset from you. And the asset is not secured by anything so this process is not without risk, even if the invoice is being paid by Google (although if your customer is Google, call us NOW! We definitely like buying invoices when Google is paying!). If you are selling one $6,000 invoice per month, the discount rate may seem fairly high, perhaps even something like 4%, but in absolute dollars, it’s not much. If you are selling hundreds of thousands of dollars of invoices and your customers are solid customers, the rate may look a lot more like something you’d see on a bank credit line (again, it’s not a loan, but rates can be down in the single digits annualized).
Why work with us
Startup Capital & Expansion Funding is a direct factor. We use our own money. And, at times, we partner up with other factoring companies. It’s all about finding you the best deal your business qualifies for and that meets your needs. We are not a huge company, so you won’t wait around for weeks and weeks wondering what’s going on with your deal while it sits on someone’s desk across the country. But, we don’t lack sophistication. Our founders have a ton of experience in corporate finance, venture capital, and mortgage banking. We know business finance and we work fast – you’ll get a “let’s move forward” or “no,” very quickly, almost always within one business day. And, when it comes time for you to find a different financial solution for your company, perhaps a more traditional business term loan, we will be there. We have a wide range of loans and other financial products to meet the growing needs of your business.