We hope the following questions and answers will provide you with an understanding of invoice construction factoring, what it is, how it works, and how your company can begin this funding process to enhance your working capital and cash flow. Please contact us in confidence today to see how we can assist you with factoring services.
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Questions About Construction Factoring
What Is Construction Factoring?
Construction Factoring is the purchase of valid Commercial Accounts Receivable [AR] for cash.
I Thought Factoring Was Used Only by Companies in Trouble?
Factoring gives your business the power to grow, without giving away equity or taking on debt. Contrary to what you may have heard, factoring is NOT a tool used only by struggling companies. Financially smart companies use factoring as a powerful tool to release capital tied up in AR.
How Is Factoring Different From a Loan, Say From a Bank?
Factoring is not a loan; it is the process of purchasing valid Commercial Accounts Receivable or AR [invoices] from your business at a small discount. Do I have to sign a Personal Guarantee? Because we give you Working Capital, Credit Protection and include AR Management Services in our fee, the real risk is your performance in meeting your customer’s needs and sadly, the occasional fraud. We ask that you stand behind your work and be honest with us in all our dealings. This is why we ask for Personal Guarantees from your company’s ownership.
Does My Business Qualify for Factoring
Almost every business can qualify. Our guidelines are very simple: if you have AR, due to a sale in a business to business (B2B) or business to government (B2G) transaction, you may qualify. Any size invoice can be funded, provided the service you offer, or the product you sell has been completed and delivered.
How Will My Customers Know Where to Send Payment for Invoices That I Have Chosen to Factor?
Your customer will be notified to pay us directly. When invoices are factored they will be stamped with the address to send payment to prior to being mailed to your customer. Your company should never deposit invoice checks that were already purchased by a factor.
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 with cash flow needs. They are very familiar with this kind of interim financing. The other alternative is to pay off the loan if there are plenty of receivables to leverage the buyout.
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! And since we credit protect both you and us against your customer’s bankruptcy, there is no reason to harass them.