Factoring In Quebec

May 17, 2012 By

Invoice factoring has been gaining popularity as a way to finance a business in recent years. There are a number of reasons for this, but the most important one is that getting business financing in Canada can be very difficult. Most financial institutions have conservative lending standards and will only provide financing to companies that have an ideal situation – a solid balance sheet, growing income statements, and around three years worth of profitable operations. The reality is that few companies can actually meet the standards. However, a business loan is not always the only – or even the best – way to address all corporate financial problems. If your company has cash flow problems because it’s offering payment terms to its customers and needs the money sooner, the solution may be to use invoice factoring. Because of this, factoring in Quebec is quickly becoming a leading source of funding for companies with cash flow problems.

The premise is simple. A company sells a product or service to a commercial or governmental customer. It offers payment terms of up to 60 days which allows the customer to take up to two months to pay the invoice. Few customers can afford to do this, but they have to if they wish to keep their customers. Factoring helps by providing an advance on the slow paying invoices. This provides the company with working capital that enables it to cover its business expenses. Perhaps more importantly, it also provides a stable financial platform that allows it to take on new customers and offer payment terms with confidence.

Basically, a factoring company advances funds to your company and uses your invoices as collateral. The factoring company also settles transactions as your customers pay on their regular schedule. This last point is very important. Your customers are not required to pay sooner – they pay on their regular schedule.

Factoring is ideally suited for:

  • Trucking companies
  • Freight brokerages
  • Staffing companies
  • Consulting companies
  • Oilfield service companies

Qualifying for factoring is usually easier than qualifying for other types of business financing. Since the factoring company is financing your invoices, it is very important that your customers have very good commercial credit quality. Additionally, your company must not have any major legal or tax problems. This low barrier of entry makes accounts receivable factoring an option for small companies that can’t obtain conventional business financing. Because of this, factoring in Canada is a growing financial alternative for companies in the province of Québec that have working capital issues because of slow paying clients.

Filed Under: Factoring Canada

Freight Factoring – What Is It?

May 14, 2012 By

Most transportation company executives are used to dealing with constant demands on their cash flow. Their trucks that need repair. There is fuel to be bought. Their drivers that need to be paid. And a myriad of expenses that need to be paid on a daily basis. On the other hand, most shippers and freight brokers usually demand payment terms. Simply, they negotiate they ability to pay their invoices in 30 days to 60 days. Shippers do this because it helps them preserve their own cash. And trucking companies offer terms because shippers demand it. This puts the transportation company executive in a position that is very difficult to manage. Unless the company has capital to cover expenses, it will run into cash flow problems. And if those problems are not managed properly, the company to risk going out of business.

The transportation industry has a simple solution for this problem – it’s called a quick pay. Basically, a shipper agrees to pay their invoice quickly in exchange for a discount. This strategy actually works fairly well provided that you find shippers and freight brokers that are willing to pay quickly. However, not every customer will offer to pay quickly. And those that do offer to pay quickly, may not do so reliably. Which basically leaves you exactly where you started – staring at the possibility of cash flow problems. For many transportation companies the better solution is to use freight factoring.

What is freight factoring? It is a form of financing that accelerates the money that is tied to your slow paying invoices. It provides similar benefits to a quick pay without requiring your shippers and brokers to pay early. When used correctly, factoring your freight bills will provide you with the financial stability you need to run your business, but more importantly, to plan for future growth.

Factoring offers a simple proposition. A factoring company advances funds, using your invoices as collateral. The first advance usually covers up to 90% of your outstanding invoices and is provided as soon as the load is delivered. The second advance, covers the remaining 10% less any fees, and is provided once your customer pays in full. While it’s not exactly the same as a quick pay, this type of financial transaction offers similar benefits. Additionally, many factoring companies offer additional services such as fuel programs and credit reviews. These can help you lower costs and minimize bad debt.

Most freight bill factoring lines can be set up relatively quickly – taking anywhere from a couple days to a week to be deployed. Additionally, they are available to small to large trucking companies alike. This makes factoring your freight bills an attractive alternative for transportation companies that have growth opportunities but are facing challenges due to slow paying customers.

Filed Under: Transportation

Best Factoring Rates – How Does The Advance Factor In?

May 14, 2012 By

Most companies that are looking for factoring financing try to focus are negotiating efforts on getting the best factoring rates. However, many prospects fail to take into account that the factoring rate is only one component of your total factoring cost. The other component of cost is the factoring advance, which plays a very important role. This article will help you understand how both the rate than the advance work so that you can be in a better position to negotiate or factoring contract. A simplified factoring transaction usually has three components:

  1. Factoring Advance: Is the amount that is paid upfront. It usually ranges between 70% and 85% of your invoice.
  2. Factoring Rate:  It’s the cost of the transaction. It’s usually a percentage.
  3. Factoring Rebate:  It’s the remaining 30% to 15% (less the factoring fee) which gets advanced to you once your customer pays the invoice in full.

In a simple factoring transaction, you get the advance immediately once the work is completed and invoiced for. The rebate, less the factoring fee, is provided once your customer pays in full. The transaction structure is very important because in order to get the lowest possible cost of funds, you need to have a combination of the lowest possible factoring rate and the highest possible factoring advance.

In our view, the most effective way to negotiate a lower cost of funds it is to outline all the details of the factoring transaction and then determine which components play a role. This will usually include the advance, the rate, the rebate, any reserves and ancillary fees. Once you have done this, you should make sure that you negotiate each and every point in order to ensure a favorable outcome. You should also note that this article only covers the factoring rate, the advance, and the rebate. Many factoring companies offer proposals that are more complex and have other variables that need to be negotiated.

Disclaimer: this article oversimplifies the very complex matter of negotiating the cost of business financing. It does not intend to replace the advice of a financial or legal professional if you require it. As a matter of fact, we encourage that you seek financial and legal advice from competent professionals that are familiar with your circumstances.

Filed Under: Factoring

Best Factoring Rates – How To Get Them?

May 10, 2012 By

Most companies that are looking for factoring use a shotgun approach where they try to contact as many factoring companies as possible, submit as many applications as possible, all with the hope that they will get the best factoring rates. While this is a common approach – it seldom works. A better approach is to evaluate factoring in a systematic way and then zero in on the companies that best fit your needs. Here is how.

From a factoring company’s perspective, the rate that they charge is a reflection of the risk of not getting paid back. The higher the perceived risk of your business – the higher the rate. It’s a simple equation. Basically, if you want to get the most competitive factoring rates for your company, you  need to find a way to lower the factoring company’s perceived risk. For many, the best way to do this is to follow these steps:

  1. Find a factoring company that is knowledgeable and established in your industry
  2. Present a professional image of your company
  3. Present a professional and complete factoring application

Let’s cover the first step. How do you determine if a factoring company is knowledgeable and established in your industry? The answer is simple – you call them and you ask. Most factoring companies will give you a good idea of the industries that they specialize in if you ask them. And this is very important because most factoring companies have certain industries that they specialize in. And because they have a good understanding of their industries, they can give the best rates.  It’s also good idea to ask them a couple of key questions about your industry, just to ensure they are as knowledgeable as they say. For example, if you’re in transportation, you should ask them about their freight bill and paperwork procedures, and which shippers and brokers there familiar with. Additionally, you may want to ask them to provide you with a few references that have been clients for more than one year.

The next step is to make sure that you present a professional image for your company. While this is subjective, it can have a great influence on the type of factoring proposal that you get. If the factoring company perceives your company to be professional, and therefore well run, it will usually assume that it has a lower risk of default. This usually translates into lower rates. Conversely,  if your company is presented in an unprofessional manner, you can expect that to be reflected in your proposal as well.

Most prospects don’t do a good job in step number three – presenting a professional and complete application. Most factoring companies are accustomed to getting applications that are very difficult to read, are missing important documents, or just plainly have inaccurate information. This will have a negative impact on your proposal. Actually, if you don’t do a good job in your application, you may be declined the proposal. Once you have selected the factoring companies that you want to apply with, your best course of action is to present a well-written and well documented application. Use careful handwriting, give honest answers, and make sure that you include everything that the factoring company is asking for. And if there is something that you can’t provide them, be sure to be upfront about it and mention it in the application.

This last point can create a problem for some prospects. Many companies look for factoring to solve their cash flow problems – and cash flow problems don’t look good in an application. So what do you do? We think the best strategy is to be honest and upfront about your problems. Factoring companies are used to working with companies in high-growth environments that have gotten themselves into cash flow problems. They will usually understand. Just be sure that you are upfront about this and present the problem honestly, alongside your proposed solution to remedy it.

In summary, the best way to ensure that you get a competitive accounts receivable factoring proposal is to make sure that you manage the perceived risk of your application. You can do this by making sure that you select a factoring company that specializes in your industry, by providing a professional presentation of your company, and lastly by making sure that your application is honest and complete.

Filed Under: Factoring

Factoring Financing in Alberta

May 10, 2012 By

In recent years, factoring financing has been gaining traction in the province of Alberta. Factoring in Alberta has become a popular business financing option for companies in many industries including the booming oil and gas industry. It provides an alternative way to solve a very common issue – cash flow problems due to slow paying customers.

Companies that are looking for financing usually face a number of challenges. Getting conventional financing in Canada is relatively difficult. Institutions will only lend money to companies that have substantial collateral, pristine income statements, and a seasoned track record of success. Unfortunately, few small or midsized companies can actually meet this criteria, leaving them with limited options.

However, business loans are not always required to fix cash flow problems. As a matter of fact, a common cash flow problem can easily be solved with factoring. Most companies have to offer credit terms to their commercial customers. This allows their customers to pay their invoices in up to 60 days. Although getting terms works very well for customers, it doesn’t always work so well for the company that’s offering them. Few have the resources to wait up to two months for payment and need funds sooner. This is were invoice factoring comes in.

Instead of waiting for customer payments, you can enter into a financing agreement with the factoring company. The factoring company will advance funds to your company using your slow paying invoices as collateral. This gives your company immediate liquidity while the financing company holds your invoices until payment. The transaction settles once your customers pay on their regular schedule. In effect, factoring achieves something that is similar to getting quick payments from your customers without actually requiring them to pay any sooner.

Factoring financing has become very popular in a number of industries such as staffing, transportation, consulting, and oilfield services. It has a lower point of entry than most conventional business financing programs. The most important collateral requirement is to have invoices from solid customers. This is critical to the success of the transaction. Additionally, your company needs to be well managed, free of major problems, and have good invoicing practices.

The biggest advantage of using factoring comes from the fact that it’s a growth oriented product. The factoring line is designed to increase as your sales grow, which provides a stable financial platform. This makes factoring financing an attractive alternative for companies in the province of Alberta that have cash flow problems due to slow paying customers.

Filed Under: Factoring Canada

Factoring Financing In Ontario

May 9, 2012 By

Factoring has become a popular option to finance companies in Ontario that have cash flow problems due to slow paying customers. In part, the growth of factoring has been fueled by the fact that getting a business loan or line of credit is relatively difficult for small and midsize companies. Most lending institutions have complicated requirements and will only finance companies that have substantial collateral, spotless financial statements, and a seasoned management team. Invoice factoring can solve this very common cash flow problem and has substantially easier qualification requirements, making it an ideal solution for small and midsize companies.

Specifically, factoring in Ontario can help companies that have cash flow problems because their commercial customers are taking up to 60 days to pay an invoice. This is common in commercial transactions where vendors are usually required to give payment terms (or credit terms) to commercial customers. Few companies have the required cash resources to offer terms and also cover their existing operational expenses. And those that can afford to cover their own operational expenses, seldom have the resources to take on new customers. In the end, growth is affected.

Factoring solves this problem by financing open invoices. This provides a similar benefit to getting quick payments from customers, without actually requiring them to pay any sooner. Basically, the factoring company advances funds to the client using their open invoices as collateral. The advance varies between 80% to 90% and is based on industry. This provides the client with the needed working capital to cover operating expenses. And more importantly, it provides immediate working capital to sustain growth. The transaction is settled once the customer pays, at which time your company receives the remaining 20% to 10%, less the financing fee.

Qualifying for a factoring line is comparatively easier because factoring companies have simpler collateral requirements than most lending institutions. The most important requirement to qualify is to have credit worthy commercial customers. This is very important since the whole transaction hinges on your ability to leverage your customers credit worthiness. Additionally, you need to have sound invoicing practices, be free of major problems, and have knowledgeable managers.

This solution is ideally suited for growing companies. This is because the invoice factoring line will increase to adapt to growing sales, as long as your company meets the factoring criteria. This feature, along with accessibility, makes accounts receivable factoring an attractive option for growing companies that have cash flow problems due to slow paying customers.

Filed Under: Factoring Canada

Factoring Financing In Canada

May 8, 2012 By

Getting a business loan in Canada has always been challenging. Most banks and lending institutions have very strict lending standards and will only provide business loans to companies that have excellent financial statements, solid assets, and a seasoned management team. This creates a problem for smaller companies that can’t meet the collateral requirements . When it comes to business financing, most owners think that a business loan or line of credit are their only options. They aren’t – factoring financing in Canada has been gaining popularity as a funding solution for companies in a number of industries.

Most companies that sell products or services to corporate customers usually have to offer payment terms – also known as credit terms. Basically, this gives the customer up to 60 days to pay the invoice. However, your company has to pay for all expenses associated with the delivery of the product or service and then wait for up to two months for payment. Few companies have the necessary cash reserves to afford this, and most would benefit from faster payments. This leaves your company with two options – neither of which is good. You can take on a customer, offer payment terms and risk cash flow problems. Or, you can decline the sale and lose the customer.

In many cases, a better alternative is to streamline your cash flow using factoring. Accounts receivable factoring uses a financial intermediary that sits between your company and your customer. They advance money to your company while using your slow paying invoices as collateral. They also settle the transaction once your end customer pays for the invoice in full. In effect, factoring can accelerate the payments that are tied to your invoices without requiring your customers to pay sooner.

One advantage of factoring over other solutions is that it has relatively simple collateral requirements. The main collateral for the transaction are your invoices, so it’s critical to have credit worthy customers in order to qualify. Additionally, your company should have solid invoicing practices, be free of major problems, and have knowledgeable owners. This puts factoring within the reach of small and medium sized businesses.

Although factoring is popular in most provinces, factoring in Ontario has experienced substantial growth in recent years. This may be because factoring is also ideally suited for growing businesses. The financing line is directly tied to your revenues, and therefore can increase as your sales to commercial customers grow. Because of this, factoring is an ideal source of growth funding for companies that have working capital problems due to slow paying commercial customers.

Filed Under: Factoring Canada

What Types of Businesses Should Use Factoring Services?

May 8, 2012 By

Factoring is a business financing product that has been gaining  market popularity in recent years as an effective alternative to lines of credit. It is designed to help companies that have certain types of cash flow problems. This short article will help you determine if your business – and your situation – are good candidates for factoring financing.

If your company offers payment terms to your customers that enables them to pay their invoices and up to 60 days – and if offering terms is creating a financial hardship – factoring financing may be right for you. Invoice factoring solves this problem by using a financial intermediary to accelerate the payments that are locked in slow paying invoices. It works by having the factoring company advance funds to your business using your invoices as collateral. This provides your company with needed working capital so that it can pay it’s critical expenses. The transaction settles once your customers pay on their regular schedule.

Companies that are good candidates for invoice factoring usually meet the following criteria:

  1. They have commercial and governmental customers
  2. Their customers are taking up to 60 days to pay their invoices
  3. They need funds sooner to pay for operational expenses such as payroll, rent, suppliers, and equipment
  4. They have profit margins of at least 15% (obviously, higher profit margins are better)

One of the reasons that factoring has become popular in recent years is that it’s comparatively easier to obtain than a business loan. The most important collateral requirement is to have credit worthy commercial customers. Most factoring companies do not require additional collateral such as hard assets or real estate. Additionally, an invoice factoring line is inherently more flexible than most conventional products. The financing line is linked to your revenues and will increase as your sales grow. This makes it a perfect alternative for growth oriented companies that have working capital problems due to slow paying customers.

Filed Under: Factoring

Financing a Canadian Transportation Company With Factoring

May 7, 2012 By

Most transportation companies in Canada have very dynamic cash flows. Trucking company owners have constant demands on their working capital – they have to pay drivers, repairs, fuel, and other expenses. And all these expenses occur regularly. However, most shippers pay their invoices 30 to 60 days after the load has been delivered. This means that the trucking company has to cover all their operating expenses from their cash reserves while waiting to get paid by the customer. Of course, this will not be a problem for large transportation companies that have substantial cash reserves. Unfortunately – it’s a problem for everybody else.

One way to solve this problem is to use factoring in Canada. Factoring provides a similar benefit to your company than a “quick pay”. However, instead of getting your “quick pay” from the customer, you get it from a finance company. This provides your trucking company with the capital it needs to pay its expenses and to grow. This last point is very important because few Canadian trucking companies can afford to grow and pay their expenses at the same time.

Factoring lines are usually structured as an advance on your open freight bills using two installments. The first installment covers about 90% to 93% of your outstanding invoices and is paid as soon as the load is delivered and accepted. The remaining funds, 10% to 7% (less the funding fee), are advanced as a second installment once your customer pays the invoice in full. There are some instances where factoring can be structured as a single installment, where you get the equivalent of the full advance and whatever is not advanced is considered the fee.

A factoring line will grow with your business. This is very important because usually that is when you need funding the most. The line is dynamic and will increase with your revenues as your sales grow – as long as you meet the factoring criteria.

The most important criteria to qualify for factoring is to have shippers with solid credit. This is very important because the factoring company is using your invoices as the collateral that backs the transaction. Additionally, your company needs to be well run and free of major problems. This makes freight factoring an ideal solution for growing transportation companies in Canada that have working capital problems due to slow paying customers.

Filed Under: Factoring Canada

Types of Invoice Factoring Financing

May 6, 2012 By

The marketplace is full of factoring companies that promote to have their own unique type invoice factoring program. While it is true that each factoring company offers their own version of factoring, the reality is that there are only two basic types of factoring. This short article will help you understand each of the factoring types and provide you with information to make a decision that is appropriate for your company.

Let’s first start with a quick definition the factoring. Invoice factoring is a type of financing that helps companies that have cash flow problems due to slow paying customers. Factoring finances your open invoices which gives your company liquidity to meet operating expenses. Most companies offer either of two types of factoring – recourse and non recourse.

Full recourse factoring: This is the most common type of factoring and is widely available. In full recourse factoring your company remains liable if an invoice is not paid by a customer for whatever reason, be it quality problems, financial problems, or if they simply don’t want to pay. If an invoice is not paid, you will have to pay back the factoring company either by providing a new invoice, allowing them to debit reserves, or simply paying them back.

Non-recourse factoring: This is a less common type of factoring and it’s usually very misunderstood. An non-recourse factoring works exactly the same as a conventional factoring line with the exception that you do not have to pay back the factoring company if an invoice is not paid due to an insolvency of the customer during the factoring period. This last point is often misunderstood and many business owners think that non recourse factoring eliminates any responsibilities for payment if a customer doesn’t pay. This is not true. For the non-recourse component to become effective the reason for the non payment has to be insolvency, usually a declared insolvency such as bankruptcy or closure. And more importantly, the insolvency needs to happen during that factoring period which usually is defined as the first 90 days from the time that the factoring company bought the invoice from you. As you can see, this offers a very narrow protection. While it’s a good protection, it’s not as comprehensive as many people think. Since many companies offer their own version of non recourse factoring you should always examine your factoring contracts with a competent attorney to make sure that you understand exactly what are you getting.

One common question that people ask themselves is which type of invoice factoring is better? This is subject to much debate in the industry. The reality is that every factoring company will spend a considerable amount of resources determining the credit worthiness of the invoices they buy. You can expect them to be very careful when purchasing any invoice so the likelihood of them buying an invoice that will default is usually very slim – but it happens. Ultimately it’s up to you as a business owner to determine if paying a premium for non recourse factoring is worth it.

Filed Under: Factoring

Is Factoring Financing The Right Financing Solution For My Company?

May 5, 2012 By

Invoice factoring has been gaining popularity as a financing solution in recent years. However, there are still a number of misconceptions as to how factoring works, who it can help, and what it can do for you. This article will help you understand factoring and help you determine if it’s the right business financing solution for your company.

Factoring solves a very specific problem – most companies that sell products or services to commercial customers have to give them payment terms. It’s common to give customers up to 60 days to pay an invoice. But the reality is that few companies can afford to offer terms because they need the money sooner to pay their own obligations. Factoring solves this problem by providing working capital to companies that are offering payment terms. The factoring financing line provides the funds to help your company cover critical business expenses. It also provides predictability to your revenues enabling you to take on new customers with confidence.

The mechanics of the factoring transaction are relatively simple. A financial intermediary, called a factoring company, advances funds to your business using your invoices as collateral. Usually the advance is about 80% of your outstanding invoices, though this varies by industry. Your company gets the remaining 20% (less any funding fees) once your customers pays and the transaction settles. A major difference between factoring and other types of business financing is in the collateral requirements. The most important collateral requirement to qualify for invoice factoring is to have solid invoices from credit worthy commercial customers. This is important because even small companies may qualify for factoring as long as they have solid customers and meet the factoring company’s requirements.

Generally speaking, factoring will be able to help you if the following are true:

  • You are at risk of missing payroll
  • You are at risk of missing supplier payments
  • You can’t afford to offer payment terms to new customers
  • Your commercial customers have good credit
  • Your company has good invoicing practices

One important advantage of invoice factoring over other business financing solutions is that the line is growth oriented. This means that your financing line will increase to match your growing sales as long as your company meets the factoring criteria. Because of this, factoring is a great option for companies that have working capital problems due to slow paying commercial customers.

Filed Under: Factoring

Financing An Offshore Oilfield Marine Transportation Company With Invoice Factoring

April 30, 2012 By

Offshore oilfield marine transportation companies have to give their customers up to 60 days to pay an invoice. Companies offer these terms to creditworthy oil and gas customers as a way to win and retain business. As a matter of fact, many large customers will demand these payment terms as a condition of doing business. The problem is that offering up to 60 days to pay an invoice can wreak havoc on your company. Unless your company is well capitalized, you will risk running into cash flow problems. You may miss critical supplier or employee payments – or worse – you could  go into an unrecoverable financial tail spin.

One way to solve this problem is to use business financing as a stop gap measure that allows you to cover expenses while waiting for payment.  The problem with this strategy is that getting a business loan is not easy. Most institutions will require that your marine transportation company have a solid income statement and balance sheet, ample collateral and a long track record of stressful operations.  Unfortunately, few companies can meet this criteria. However, a business loan is not the only – or the best – option for this type of cash flow problem. Another solution, called invoice factoring, may be better at solving this problem.

Factoring solves this problem by reducing the time it takes you to collect your revenues. This provides the working capital you need to  meet current expenses – and more importantly – the confidence to take one new customers. With factoring, your customers are not required to pay faster. Rather, a factoring company intermediates the transaction an advances funds to your oilfield marine transportation company using your invoices as collateral. The transaction is settled once your customers pay their invoices in full.

One advantage of factoring over other solutions is that it’s easier to obtain. The most important qualification requirement is that your customers must have solid commercial credit. Fortunately, most larger customers in the oil and gas industry meet this criteria. Additionally, your company should meet these requirements:

  1. Invoice customers for completed work
  2. Your company should not be encumbered with legal or tax problems
  3. Your invoices should be free of liens
  4. Company owners should have an industry track record and a good reputation

When used correctly, accounts receivable factoring can provide your company with financial stability which can be used as a platform for growth. Most factoring lines will increase with your growing sales, making them a flexible solution for growing companies. This makes factoring an ideal option for growing offshore oilfield marine transportation companies that have cash flow problems due to slow paying customers.

Filed Under: Oil & Gas

Factoring Financing For Waste Disposal Companies

April 19, 2012 By

Most companies that offer commercial waste disposal services have to offer payment terms to their customers. They  give customers up to 60 days to pay their invoices, which is a common practice for companies that handle medical waste management services, sharp object and hazardous material disposal and document destruction.  However, offering payment terms to customers has a serious drawback. It can create cash flow shortages, preventing you from covering your own operating expenses. These problems can have serious effects if the company is just starting  or if it’s in growth mode- because that’s when you need predictable cash flow the most.

The obvious way to fix this problem is to use business financing to fund operations. But business financing is hard to come by – most institutions have strict lending criteria and only the companies with the best financial statements and most assets qualify for it. However, there is a new financing alternative that has been gaining traction as a way to solve cash flow problems caused by slow paying customers – it’s called invoice factoring.

Invoice factoring provides an advance on your slow paying invoices, basically accelerating your revenues. It provides your waste disposal company with the working capital to handle ongoing expenses. But more importantly, factoring provides predictable cash flow which enables you to take on new customers.

Factoring transactions are structured as a two installment advance on your slow paying invoices. The first installment is provided once you invoice your customer for completed work. This installment, called the advance, covers about 80% of the value of your invoices. The second installment, called the rebate, covers the remaining 20% (less fees) and is provided once your customer pays their invoices in full. Note that your customers do not need to pay their invoices any sooner – they pay on their regular schedule.

To qualify for factoring, your company must meet this criteria:

  • Your customers must have good commercial credit
  • Your invoices must be for completed and accepted services
  • Your company must not have serious legal or tax problems
  • Company owners must have industry experience and a good reputation
  • Your invoices must not be encumbered by liens
One of the main advantages of accounts receivable factoring is that the line is flexible and will increase alongside your sales, as long as you meet the factoring criteria. This makes factoring an ideal alternative for growing waste disposal companies that have working capital problems that are due to slow paying commercial customers.

 

Filed Under: Business Services

Factoring Financing in Canada

April 18, 2012 By

Financing a business in Canada has always been challenging. Few small businesses qualify for conventional business financing because many institutions have very strict lending criteria. They can only provide loans to companies that have spotless financial records, substantial collateral and a long track record of success. The problem is that few companies can meet these criteria, leaving them with limited options. However, there is a financing alternative that has been gaining popularity in Canada in recent years. It’s called factoring and it’s designed to help companies that have cash flow problems due to slow paying customers.

Most companies that sell a product or a service to another company have to offer payment terms to their customers. These terms usually give the customer up to 60 days to pay an invoice. And in today’s environment, companies have to offer terms to their best customers if they want to keep them. But this leaves them with a problem because few small businesses can afford to wait long for payment – they have their own expenses to pay. Invoice factoring solves this situation in a simple way. A factoring company advances funds to your business using your slow paying invoices as collateral. This provides your company with the immediate funds it needs. But more importantly, by accelerating revenues, factoring provides a solid financial footing that enables you to manage you business and focus on growth.

Most factoring transactions are structured as the funding of an invoice in two installments. The first installment is called the advance, and covers up to 90% of the invoice (this varies by industry). The advance is provided as soon as the work is invoiced for and accepted by the customer. The second installment is called the rebate, and covers any remaining portion that was not advanced, less the fee. The rebate is provided when your customer pays the invoice.

Factoring in Canada has a number of advantages over other financial solutions. The funding line is flexible and is designed to increase as your sales grow, which enables you to easily handle new orders. Additionally, it’s easier to obtain than many solutions. The most important requirement to qualify  is that your customers must have good credit. Additionally, your business must not have legal or tax problems. This makes invoice factoring an ideal solution for growing companies that have cash flow problems due to slow paying customers.

Filed Under: Factoring Canada

Freight Factoring Financing For Trucking Companies

April 9, 2012 By

One of the biggest challenges for trucking and transportation company owners is managing their working capital. This can be difficult because you have to manage the tug-of-war between expenses and revenues. On the expense side of things, you need to pay drivers, fuel and repairs. And these expenses happen constantly. On the revenue side of things, you have customers that want to pay their invoices in 30 to 60 days. This leaves your company right in the middle. If your company has the necessary financial resources, this will not be a problem. However, for the majority of companies, waiting up to 60 days for invoice payments can cause serious problems. And if this situation is not managed correctly, it can blossom into a full-fledged cash flow crisis.

One way to address this situation is to ask customers for quick pays. While this can work, it is also very unpredictable because customers can choose to pay slowly at any time. A better strategy is to use business financing to cover expenses while waiting for customers to pay their invoices. There is one slight problem with this strategy – getting conventional business financing is very difficult. Most financial institutions will demand substantial collateral, impeccable financial statements, and a long track record of success before providing a business loan. However, there is a solution that has been gaining traction as the right product for this problem – especially for transportation companies. It is called freight factoring.

Factoring freight bills solves the problem by accelerating the revenues that are tied to your slow paying invoices from credit worthy commercial customers. This provides your trucking company with the working capital it needs to pay drivers, fuel, and repairs. But more importantly – it provides the working capital you need to operate your company and take on new customers with confidence. It works by partnering with a factoring company, who advances funds to your trucking company using your slow paying invoices as collateral. The transactions settle once your customers pay in full.

One advantage of freight  bill factoring is that it is easier to obtain than other types of business financing. The most important requirement is that your trucking company must do business with credit worthy commercial customers. This is very important as their invoices – and their payment ability – acts as collateral for the transaction. Additionally, your company should also meet the following criteria:

  1. Your invoices must not be encumbered by liens
  2. Your company must not have serious legal or tax problems
  3. Company owners and managers must have industry experience and a good reputation
  4. You must only invoice for delivered an accepted loads

One of the most important advantages of using invoice factoring is that the financing line is designed to grow as your sales increase. This is a very important feature because it is common for businesses to start growing once they have the right type of financing. This helps ensure that you will not outgrow your funding solution. Because of this, factoring is an ideal solution for growing trucking companies that have cash flow problems related to slow paying customers.

 

Filed Under: Transportation

Financing A Seafood Distributor With Factoring

April 4, 2012 By

Most seafood distribution companies are faced with a constant tug of war between income and expenses. On the income side, most commercial customers can take up to 60 days to pay an invoice. This is a common industry practice where distributors usually offer payment terms to credit worthy companies . On the expense side,  most seafood suppliers expect quick payments. In the end, you have to pay suppliers before your own customers pay you – which leaves you right in the middle. If your company has limited financial resources, this will limit growth. And if this situation is not managed correctly, it could also send your seafood distribution company into a financial tailspin.

One way to manage this cash flow problem is to use business financing to cover company expenses while waiting for customer payments. The problem with this strategy is that obtaining business financing in today’s environment is very difficult. Most lending institutions will often demand that your seafood company have substantial collateral, impeccable financial statements and a long track record of success. Realistically, few small and midsize seafood distributors can meet these criteria. For many smaller companies, a better solution is to use invoice factoring.

Factoring solves this common working capital problem by accelerating your revenues that are locked in slow paying invoices. This provides your company with the liquidity to meet supplier expenses. More importantly, it enables your company to take on new customers without having to worry about their slow payment habits. When used correctly, factoring can provide financial stability and a platform for growth.

Most factoring transactions are structured as a two installment advance on your invoices. The first installment is paid as soon as the seafood is delivered and accepted by your customer – it covers between 70% and 85% of your invoice. The remaining 15% to 30% is rebated, less a factoring fee, as a second installment when your customer pays in full on their usual schedule. Note that your customers do not need to pay any sooner.

One of the advantages of factoring over other business financing solutions is that it is easier to obtain. The most important requirement is that your customers must have good commercial credit. This is critical because the factoring company is using your customers credit as collateral for the transaction. Aside from this, your company must also:

  1. Invoice for delivered and accepted seafood
  2. Not have serious tax or legal problems
  3. Your invoices must be free of liens
  4. Have industry experience and a solid reputation

Accounts receivable factoring lines are designed with growth in mind and will increase alongside your sales, provided that the transaction meets all the factoring requirements. This makes invoice factoring an ideal solution for growing seafood distribution companies that have cash flow problems due to slow paying customers.

Filed Under: Distributors and Resellers

Freight Factoring For A 3PL Company

April 4, 2012 By

Most third party logistics companies (3PL) live in a constant tug-of-war competition between revenues and expenses. In this industry, most commercial customers pay their invoices in 30 to 60 days.  However, the third-party logistics company has immediate ongoing expenses and usually can’t afford to wait up to eight weeks for an invoice payment. Furthermore, few 3PL companies have the financial resources to extend payment terms to customers and to take on new customers at the same time – leaving them financially shackled.

One way to address this problem is to use business financing to cover expenses while waiting for customer payments. The challenge with this strategy is that qualifying for business financing is very difficult in today’s environment. Most lending institutions will demand substantial collateral, impeccable financial statements, and a long track record of success before providing a business loan. Few small or midsize third party logistics companies can meet these requirements. For many, a better alternative is to use freight factoring.

Factoring freight bills accelerates the revenues that are tied to slow paying invoices. This provides your 3 PL company with the needed funding to cover ongoing expenses while minimizing the worries associated with slow payers. More importantly, when freight bill factoring is used correctly, your logistics company will be in a better position to take on new customers and grow.

Factoring works by providing an advance for your slow paying invoices. The advance is usually paid in two installments. The first installment covers 90% of your outstanding receivables, and it’s paid as soon as the loads are delivered and accepted. Your company gets the remaining 10%, less the factoring fee, as soon as the customer pays the invoice. It is important to note that your customer still pays their invoices on their regular schedule.

To qualify for factoring your third-party logistics company must have credit worthy customers. This is perhaps the most important qualification criteria because the whole transaction hinges on the credit worthiness of your customers and your invoices. Additionally, your company should meet the following requirements:

  • It must not have any serious legal or tax problems
  • It must only invoice for delivered loads or completed work
  • Your invoices must be free of liens
  • Company owners must have a good reputation and industry experience

Most factoring lines are designed with growth in mind and will increase automatically as your sales grow – provided your customers have good credit him provided that your company meets the factoring company’s criteria. Because of this, freight factoring is an ideal solution for growing 3PL companies that have cash flow problems due to slow paying customers.

Filed Under: Transportation

Financing A Fluid Hauling And Saltwater Disposal Company With Factoring

March 29, 2012 By

The oil and gas industry has been growing by leaps and bounds in recent years. This, in turn, has increased the demand for oilfield services such as those provided by transportation companies that deliver and haul away fluids and saltwater. However, the rapid increase in demand has also brought some cash flow problems to service companies that were not financially prepared. These problems stem from the fact that most oil and gas companies pay their invoices in 30 to 60 days. Few companies can afford to wait that long for payment and take on new clients at the same time. They simply don’t have the resources because they need funds to meet their ongoing expenses such us vehicle maintenance, vacuum truck maintenance, equipment purchases, and payroll.

One simple way to solve this problem is to use business financing to cover ongoing expenses while waiting for your customers to pay. However, qualifying for conventional business financing can be very difficult. Most lending institutions require that your company have plenty of collateral, substantial assets, and a long track record of successful operations. These restrictive conditions usually rule out small and midsize companies. For many fluid hauling of salt water disposal companies, a better solution is to use an alternative business financing solution called invoice factoring.

Invoice factoring provides financing using your slow paying invoices as collateral. Basically, a factoring company advances a portion of your slow paying invoices to your oilfield services company. This provides the needed working capital to meet ongoing expenses, but more importantly, it gives you the confidence to take on new business without worrying about slow payments.

Most factoring transactions are structured as the funding of your receivables in two installments. The first installment covers around 80% to 85% of your outstanding invoices and is provided to your company as soon as the work is delivered and accepted by the customer. The remaining 15% to 20% (less the factoring fee) is advanced to your company as a second installment, once your customer pays the invoice in full. Please note that your customers pay your invoices on their regular schedule.

One advantage of factoring is that it’s easier to obtain than conventional business financing. The most important requirement to qualify is to have credit worthy customers. This is very important because your customers credit acts as collateral for the transaction. Fortunately, most companies in the oil and gas industry have been doing relatively well and have good credit. Additionally, your company should also meet these criteria:

  1. You should only invoice for delivered and accepted work and products
  2. Your company should not have major legal or tax problems
  3. Your invoices must be free of liens and encumbrances
  4. The company owners should have industry experience and a good reputation

Factoring lines are usually designed to be flexible and will grow alongside your sales, provided your customers and your company meet the factoring criteria. This is a very important feature that is not commonly found on other types of business financing solutions. Because of this, accounts receivable factoring is an ideal solution for fluid hauling of salt water disposal companies that have cash flow problems due to slow paying customers.

Filed Under: Oil & Gas

Invoice Factoring For School Bus Companies

March 28, 2012 By

Most county and public schools provide bus services to students by working with subcontractors that actually own and operate the buses. Having a school bus contract can be a major benefit for these subcontractors because they provide reliable revenue to the business during the school year. The main challenge however, is that most school districts take anywhere between 30 days to 60 days to pay their invoices. This puts financial pressure on smaller bus companies that can’t afford to wait that long for payment because they have their own bills to pay. School bus and transportation companies are well known for being cash flow intensive businesses – for example they need to cover fuel, maintenance, repairs, and salaries on a regular basis. For many companies, slow payments are simply not an option.

One way to address this problem is to get business financing. However getting conventional business financing is very difficult in this environment. Many financial institutions have very strict lending criteria and require companies to have substantial assets, lots of collateral, and a long track record of operational success. Unfortunately, few school bus companies can actually meet this criteria. However, there is an alternative that has been gaining traction in recent years as a solution for this specific problem. It is called invoice factoring.

Factoring financing solves this problem by accelerating the revenues that are tied to slow paying invoices that are due from public schools. It provides the needed funding that enables you to operate your business. It works by partnering with a factoring company, who advances funds for your slow paying invoices while using them as collateral. They also settle the funding transactions once the schools pay their invoices, on their usual schedule. Note that schools are not required to pay any sooner.

Most factoring transactions are structured as the purchase of your accounts receivable in two installments. The factoring company advances around 80% of your outstanding invoices as soon as the work is completed and invoiced for. The remaining 20% is advanced as a second installment (less a fee) once school pays in full.

One important advantage of factoring lines is that they are flexible and will grow with your business – as long as your customers have good credit and as long as your company meets the factoring criteria. This makes accounts receivable factoring a great alternative for school bus companies that have growth potential but are challenged by slow paying schools.

Filed Under: Government Suppliers

Factoring Financing For Commercial Laundry Companies

March 28, 2012 By

Most commercial laundry and linen companies that work with restaurant chains, hotels, and hospitals are painfully aware that most commercial clients will insist on getting 30 to 60 day payment terms as a condition of doing business with you. This is a common business practice and most commercial laundry companies have to offer terms in order to remain competitive. However, commercial laundry companies have a number of ongoing expenses such as electricity, water, machine repairs, and salaries – and few have the financial resources to wait that long for payment.

Of course, one strategy is to ask customers for quick payment. This can work at times, but considering that most customers have many alternatives among your competitors, it can also be a risky strategy. A better strategy is to offer the customer an incentive for quick payments, such as a 2% discount that is offered for payments in less than 10 days. While this strategy can have some success, it is far from perfect since you still end up relying on your customers for faster payments. There is one way to address this problem without requiring that your customers pay sooner. It involves accelerating your cash flow using invoice factoring.

Factoring your invoices offers a simple solution – a factoring company advances funds to your company using your slow paying invoices as collateral. This provides your commercial laundry company with the funds it needs to meet its critical operating expenses while at the same time minimizing worries about slow paying customers. Factoring financing can work very well in this environment and  provide a commercial laundry company with an ongoing source of working capital. This ensures that the company has proper liquidity and is well positioned to take on new customers.

Most factoring transactions are structured as the purchase of your invoices in two installments. The factoring company usually advances up to 85% of your outstanding accounts receivable from qualifying customers as soon as the work is delivered and invoice for. Your company then gets the remaining 15% as a second installment, less a financing fee, as soon as your customer pays the invoice in full.

One important difference between factoring companies and other financial institutions is that the main collateral for the transaction are your invoices. Because of this, it is critical that you work with commercially credit worthy customers. Aside from this, your company should also meet this criteria:

  1. You must only invoice for delivered and accepted work
  2. Your invoices must be free of liens and encumbrances
  3. Your company must not have serious tax problems
  4. Your company must not have serious legal problems
  5. Company managers and owners should have industry experience and a good reputation

Factoring lines are designed with growth in mind. When used properly, your funding should increase in conjunction with your sales as long as your customers and your company meet the funding criteria. Because of this, accounts receivable factoring can be an ideal solution for growing commercial laundry companies that have cash flow problems due to slow paying customers.

Filed Under: Business Services
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