Payment for goods in which the price is paid in full before shipment is made. Asset-based loans are an alternative to more traditional lending which is generally characterized as a higher risk which requires higher interest rates.Ĭash Against Documents is the payment for goods in which a commission house or other intermediary transfers title documents to the buyer upon payment in cash. Service For details go to Accounts Receivable Factoring »Īdvances Against Documents are loans made solely based on the security of the documents covering the shipment.Īsset Based Lending is a method of Trade Financing that allows a business to leverage company assets as collateral for a loan. The purchaser of the receivables relies on the creditworthiness of the customers who owe the invoices, not the subject company. Accounts receivable is considered a current asset on a balance sheet once an invoice has been sent to the customer.Īccounts Receivable Factoring is a method of Trade Financing where a company sells their accounts receivable in exchange for working capital. The Factor is not required to cover disputed invoices.Īccounts Receivable is money owed to a company by a customer for products and /or services sold. The Factor cannot come back to you for payment if the customer fails to pay. With non-recourse factoring risk of insolvency and non-payment is transferred to the Factor. Recourse factoring offers lower fee because of less risk. You agree to buy back or exchange with other invoices of equal or greater value, noncollectable invoices. Recourse Factoring is appropriate if you have financially healthy clients. After the factor collects the invoice from the debtor, you receive the remaining amount on the invoice, less the factoring fee. The factor then forwards a percentage of the invoice to you. With Medical Services Factoring, you perform a service and send the invoice to the factor. It gives you quick access to funds to pay bills, payroll, and buy equipment. Medical Services Factoring fills the cash gap inherent with receivables of third-party payers, such as insurance companies, Medicare or Medicaid. The factor pays you the balance when it receives payment from the customer, less a small fee. The client pays the factor, not you, once it receives the goods. The finance company or factor purchases your receivables and forwards payment, usually 70% to 90%, once it has the receivables documentation. We will help you find the financial partner that will provide the best solution for your company’s particular situation.Įxport factoring works for companies that want to offer terms to international customers but still want to receive cash when the goods are delivered. Few factoring firms work with the construction industry, but we have direct lines into those that do. The financier (factor) purchases construction invoices and advances a percentage-often within 24 hours-then collects the funds and forwards the remainder of the invoice to you, less a factoring fee. This flexibility comes at a premium but often makes sense if you have one client that is particularly slow or if a consistent flow of capital is not needed Construction FactoringĬonstruction finance offers sub-contractors and general contractors access to quick cash from your invoices so you can get the funds you need to start your next project. Unlike traditional factoring, where the company turns over all invoices, spot factoring is available on an as-needed or one-time basis. Typically, businesses will want to spot factor when they don’t need a steady flow of cash or have varying gross margins where it does not make sense to factor. Small business owners opt for this form of factoring when they do not want to factor all of their invoices. It deducts a small fee, based on the size and age of each invoice. The factor pays you the remainder of what you’re owed once your client pays the factor, usually 30 to 45 days later. The finance provider, known as the factor purchases all of your accounts receivables and advances you 70% to 90% of the total amount within 24 to 48 hours. You are able to create an immediate influx of cash based on the invoices already on your books. Traditional factoring is an ideal solution for companies that need extra cash flow to purchase inventory, cover payroll or invest in marketing.
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