Q. How much money will I get through factoring?
A. We typically will advance you 70 — 85% of the amount of your receivables immediately, and the balance, less our fees, when the invoices are actually paid. For instance, if you have $100,000 in accounts receivable on your books, you could immediately receive up to $85,000 in additional working capital. If your sales increase, so will your receivables, and we will advance you more capital. You can see that factoring can be best described as a way of financing your sales.
Q. How long will it take before I receive funding?
A. Once you are established as a client of The Invoice Bankers, funding usually occurs within a day or two after you submit your invoices to us for factoring. We can often establish you as a client within a week. There is no quicker funding source than factoring with The Invoice Bankers.
Q. How much are your factoring fees?
A. They vary depending on the amount of factoring volume you do with us, the size of your invoices, and who your customers are. In general, our fees are no higher than those charged by a credit card company to businesses that accept credit cards for payment. We will gladly give you a firm quote of our exact fees for your situation after we have enough information — we do not charge any fee for a quote. You can get the process started by going to the “Factoring Application” page on this website.
Q. Can I factor my consumer receivables?
A. Unfortunately, no. Although most consumers are credit-worthy, our legal system simply doesn’t provide a method for successfully factoring consumer receivables. Factoring is suitable only for businesses that have other businesses as customers.
Q. Will you collect my old accounts for me?
A. We generally factor current accounts and accounts that are not past due. Unfortunately, factors are not a substitute for a good collection agency or attorney.
Q. What if some of the accounts I factor get old?
A. Oftentimes, just the act of factoring will prompt some of your customers to pay more quickly. This is because many factors are reporting companies to the various credit agencies, and your customers know this. They may also know that you are not a reporting company, and if they are slow in paying you it will not be reported. However, if an account we have factored becomes substantially past due, we will discuss the situation with you before taking any collection action. We are respectful of your customer relationship. Also, if we take collection action, you are spared the dilemma of trying to keep your customers happy while trying to collect from them at the same time.
Q. Are there any other benefits to factoring?
A. Yes, there are many other benefits other than the predictable cash flow and the capital you will receive. We supply you with weekly reports of all activity on your accounts at no charge as part of our factoring activity. This should save you time and administrative expense. We will check the credit of potential future customers before you extend them terms, vastly reducing your bad debt expense.
Q. Will factoring my invoices hurt my customer relationships?
A. No, in fact it can help your relationships. Your factoring of invoices enables us to provide a form of Quality Control for you. If your customer is dissatisfied or unhappy with your products or services, they are quite likely to tell us about it. We will relay these comments to you so you can take appropriate action to keep your customer happy. At the Invoice Bankers we are very mindful of the time and care you have taken to develop your client relationships.
Q. What if there is a bankruptcy, bad credit, poor financials or other derogatory information in my company’s or my history?
A. Generally this is no problem. The Invoice Bankers focuses on the credit-worthiness of your customers, not on your credit. If you have good customers, we can provide capital based on their credit-worthiness rather than yours.
Q. Must my business meet net worth, profitability, debt-coverage, years in business or other financial ratio requirements?
A. No. As discussed in the answer above, we look through your business to the credit-worthiness of your customers.
Q. If I factor, can my business still borrow money from other sources?
A. Yes! That is one of the big advantages of factoring. The Invoice Bankers only takes a security interest in your accounts receivable. Your plant, equipment, intellectual property, inventory, etc., are unencumbered and available as collateral for other lenders. Be aware that if a commercial bank provides you with credit, they almost always take a security interest in ALL your assets. This means that you cannot borrow from any other source, since you have no collateral to offer another lender.
Q. What if my business has already borrowed from a bank, can I still factor?
A. Mostly yes, but sometimes no. You can factor without difficulty if your bank has not taken a security interest in your accounts receivable — rare, but does happen. More likely, your bank has taken a security interest in all of your assets, which includes accounts receivable. In this situation, The Invoice Bankers will be glad to work with your company and your bank to work out an acceptable arrangement.