Davenham is the latest factoring company to cease

Aston Rothbury has gone bustRestaurants and eating out etc.Recent CommentsDave on Another one bites the dust at Close Invoice FinanceIan on Bibby is not being taken over by Ultimate FinanceIan on Bibby is not being taken over by Ultimate Financejules on Another one bites the dust at Close Invoice FinancePAUL on Another one bites the dust at Close Invoice FinanceALAN on Another one bites the dust at Close Invoice FinanceIan on Aston Rothbury portfolio acquired by Bibbye-affacturage on Another factoring broker who thinks it’s acceptable to steal intellectual property Popular PostAnother one bites the dust at Close Invoice FinanceAbout the factoring blogFairfax Gerrard in AdministrationCattles Invoice FinanceWageroller in AdministrationChallenge Finance enters Administration Meta RegisterLog in

It has been well known for a while that Davenham were in serious trouble and they have been pretending to lend recently rather than actually doing so.

The staff were told to expect a decision on the company’s future by the end of June and that future now seems to be that they are formally ceasing to write new business whilst the company enters “collect out” mode.

Whilst it is possible for them to collect out their loan book in a prudent and orderly manner as claimed by the company, one cannot do that with factoring so I hope that arrangements are in hand to transfer the book to another factoring company causing as little pain as possible in the process.

This is the third factoring company in a very short space of time to crash into the rocks following hard on the heels of Aston Rothbury a few days ago and Challenge a few months ago so let’s hope that this is the end of it now as it doesn’t do the industry any good at all.

Posted under Factoring, Factoring companies

This post was written by Ian on July 2, 2010

Tags: Aston Rothbury Factors, Davenham

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Aston Rothbury portfolio acquired by Bibby

Davenham is the latest factoring company to ceaseAston Rothbury has gone bustRestaurants and eating out etc.Recent CommentsDave on Another one bites the dust at Close Invoice FinanceIan on Bibby is not being taken over by Ultimate FinanceIan on Bibby is not being taken over by Ultimate Financejules on Another one bites the dust at Close Invoice FinancePAUL on Another one bites the dust at Close Invoice FinanceALAN on Another one bites the dust at Close Invoice FinanceIan on e-affacturage on Another factoring broker who thinks it’s acceptable to steal intellectual property Popular PostAnother one bites the dust at Close Invoice FinanceAbout the factoring blogFairfax Gerrard in AdministrationCattles Invoice FinanceWageroller in AdministrationChallenge Finance enters Administration Meta RegisterLog in

Bibby Financial Services have acquired the client portfolio of Aston Rothbury Factors which apparently comprises just 40 clients and is considerably less than the 109 clients claimed in Business Money earlier this year.

Posted under Factoring

This post was written by Ian on July 27, 2010

Tags: Aston Rothbury Factors, Bibby Financial Services

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Another factoring broker who thinks it’s acceptable to steal intellectual property

Aston Rothbury portfolio acquired by BibbyDavenham is the latest factoring company to ceaseAston Rothbury has gone bustRestaurants and eating out etc.Recent CommentsDave on Another one bites the dust at Close Invoice FinanceIan on Bibby is not being taken over by Ultimate FinanceIan on Bibby is not being taken over by Ultimate Financejules on Another one bites the dust at Close Invoice FinancePAUL on Another one bites the dust at Close Invoice FinanceALAN on Another one bites the dust at Close Invoice FinanceIan on Aston Rothbury portfolio acquired by Bibbye-affacturage on Popular PostAnother one bites the dust at Close Invoice FinanceAbout the factoring blogFairfax Gerrard in AdministrationCattles Invoice FinanceWageroller in AdministrationChallenge Finance enters Administration Meta RegisterLog in

One of the problems that being top of the search engine rankings causes me is that there are always unscrupulous people out there who rather than develop their own websites just copy mine.

Since I started this blog I have commented twice on unscrupulous rogues that have copied my website and now another one has crawled out of the woodwork.

factoringandfinance.co.uk and ajmartinco.com are word for word copies of www.factoringsolutions.co.uk with only the chap’s name and phone number changed. I telephoned him to ask him why he had stolen my intellectual property and he denied it saying that it hadn’t been copied.

One would have to be pretty stupid to try and make a case out that his website is original, especially when the source code still includes a link to my stats package complete with site name.

I repeat what I have said before

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Save money and use a factoring broker

Another factoring broker who thinks it’s acceptable to steal intellectual propertyAston Rothbury portfolio acquired by BibbyDavenham is the latest factoring company to ceaseAston Rothbury has gone bustRestaurants and eating out etc.Recent CommentsDave on Another one bites the dust at Close Invoice FinanceIan on Bibby is not being taken over by Ultimate FinanceIan on Bibby is not being taken over by Ultimate Financejules on Another one bites the dust at Close Invoice FinancePAUL on Another one bites the dust at Close Invoice FinanceALAN on Another one bites the dust at Close Invoice FinanceIan on Aston Rothbury portfolio acquired by Bibbye-affacturage on Another factoring broker who thinks it’s acceptable to steal intellectual property Popular PostAnother one bites the dust at Close Invoice FinanceAbout the factoring blogFairfax Gerrard in AdministrationCattles Invoice FinanceWageroller in AdministrationChallenge Finance enters Administration Meta RegisterLog in

I like to think that the major advantages of using the services of a specialist factoring broker like myself is that many of the factoring companies don’t perform as well as they claim and I know the market sufficiently well to steer companies away from the poorer performers.

Whilst some companies might approach me with this view in mind I’m sure that many would rather approach the factors directly believing that it would save them money on the basis that if I receive an introductory commission from the factoring company they would get a cheaper rate by going direct as the factor wouldn’t then have to pay me.

I received an email last night from a prospective client asking me to quote an approximate rate for his business. I spoke to my contact at the factoring company that I thought to be most appropriate who quoted me a rate which I subsequently emailed to the prospect.

I received a telephone call this morning from him saying that he wished to go ahead at the quoted rates but he was quite surprised when I told him which factoring company it was as he had already approached them directly and they had quoted a significantly higher rate.

Posted under Factoring companies, factoring brokers

This post was written by Ian on September 21, 2010

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Bibby is not being taken over by Ultimate Finance

Save money and use a factoring brokerAnother factoring broker who thinks it’s acceptable to steal intellectual propertyAston Rothbury portfolio acquired by BibbyDavenham is the latest factoring company to ceaseAston Rothbury has gone bustRestaurants and eating out etc.Recent CommentsDave on Another one bites the dust at Close Invoice FinanceIan on Ian on jules on Another one bites the dust at Close Invoice FinancePAUL on Another one bites the dust at Close Invoice FinanceALAN on Another one bites the dust at Close Invoice FinanceIan on Aston Rothbury portfolio acquired by Bibbye-affacturage on Another factoring broker who thinks it’s acceptable to steal intellectual property Popular PostAnother one bites the dust at Close Invoice FinanceAbout the factoring blogFairfax Gerrard in AdministrationCattles Invoice FinanceWageroller in AdministrationChallenge Finance enters Administration Meta RegisterLog in

Shares in Ultimate Finance were suspended this morning subsequent to an announcement that talks were well down the road leading to a reverse take-over of another factoring company.

Needless to say the wires have been hot with speculation today and so far it has been confirmed that 15 different factoring companies were the target according to 15 different people with Bibby being the only one so far that hasn’t been mentioned.

I will admit now that I honestly haven’t a clue who the target is and although I can rule out many of those being speculated about on the basis of size, culture or geography I can’t come up with a sure fire alternative.

Posted under Factoring, Factoring companies

This post was written by Ian on September 22, 2010

Tags: Ultimate Finance

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What exactly is Accounts Receivable Factoring

Accounts Receivable Factoring is a technique of increase the amount of cash for the company. The companies that will be able to do this are the ones that are business to company. Should you don't do this, then you will not be able to have your invoices factored. Factoring is a way of discounting your invoices and selling them to investors or factoring businesses. Some variables will figure out the factoring fee that you'll need to pay for invoice factoring, but generally the fees will be low.

From Yahoo:

“The Royal Bank of Scotland Group plc has agreed the sale of RBS Factor SA to GE Capital,” the bank said in a statement. Factoring may be the procedure whereby money is advanced to businesses, as a proportion of revenue from invoices issued. The debt is reassigned towards the factoring company, which enables them to collect it. RBS, which had sold already its German factoring division to GE Capital in March, did not disclose how much is going to be paid. Both deals are subject to regulatory approval and expected to complete by the third quarter of 2010. RBS added: “As part with the group's strategic plan, announced in February 2009, this business was placed in the non-core division while the group sought a new owner having a long term commitment to the factoring sector in France.”

The Factoring Buiness is definitely large. If there are enough margins to account for the factoring costs, then this can take your company to the next level. Increasing the bottom line and giving your business the growth that it's asking for is one with the greatest things that you can do for the company. Certainly look into getting your invoices factored so that you always look at your choices.

This entry was postedon Saturday, May 22nd, 2010 at 1:14 pmand is filed under Uncategorized.You can follow any responses to this entry through the RSS 2.0 feed.You can leave a response, or trackback from your own site.

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Accounts Receivable Factoring

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Accounts receivable factoring is the best Option

Trucking , Freight and Factoring in Canada have become somewhat synonymous terms. Let's look at some of the reasons for that.

Canadian Trucking and Transport firms have historically been significantly challenged in financing their company through traditional working capital methods – i.e. bank loans, bank lines of credit, working capital term loans, etc. When these are not available (for a variety of reasons!) Your trucking and transport firm, no matter what size, should consider receivable financing, also known as freight factoring .

In the past we have spoken of the 'working capital gap '. Nowhere is this 'gap 'more evident in the trucking industry. Will it require rocket science to understand the gap? Not really, it's as simple as this – your drivers, fuel suppliers and other want to be paid weekly, or within 30 days, whatever their terms are with your firm. You have receivable, but these tend to be collected in 60 days, sometimes more, sometimes less, mostly more!
That's the working capital gap.

As a trucker or truck firm owner you are looking for a better way to finance your business. Truck factoring / freight factoring in essence give you an unlimited amount of credit line based on the receivables as collateral. As your business grows, so does your factoring facility.

This type of accounts receivable or invoice discounting facility allows you to pay suppliers and employees, and further allows you to focus on growing your business. What you are doing in essence is capitalizing your business with the proper amount of working capital. That's common business sense, and allows you not to tap into either personal financial resources or enter into long term loans, assuming you qualify for those loans – many don't in the somewhat challenging current financial and banking environment.

So it all sounds kind of easy, do it not. There are of course issues you have to both understand and address. One if of course fees, which range in Canada from 1-3% per month. As a business owner of financial manager of a truck or transport firm there are numerous ways in which you can offset part, or in some cases all of your financing charges. One of these very obvious ways is to use the new cash and working capital that you generate from your factoring and accounts receivable discounting facility to pay suppliers on time and take their discounts.

When we talk to Canadian business firms, including truck or transport firms more and more of their time is focused on looking for cash flow solutions and not on running and growing their business. With a proper accounts receivable and factoring facility you can focus on growing your firm's sales and profits.

In Canada factor solutions for truck and transport firms, how they work on a day to day basis, and their costs differ greatly, and we mean greatly. We recommend you talk to a trusted and experienced advisor in this area to maximize the solution that's best for your firm in terms of rate, structure, and day to day paperwork.

Factoring

This entry was postedon Wednesday, May 26th, 2010 at 4:20 pmand is filed under Factoring.You can follow any responses to this entry through the RSS 2.0 feed.You can leave a response, or trackback from your own site.

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Accounts Receivable Factoring

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Get Some Accounts receivable factoring Information and facts

Most Canadian business owners and financing mangers often seek out factoring as a quick way to get out of a cash flow crunch when other more traditional methods of financing have been exhausted.

Typically clients tell us that sales or revenue generation is not the problem, with the bigger challenge simply being how to convert those sales into cash flow and working capital. Factoring comes at a higher price than traditional bank financing but most Canadian business owners recognize that other options are limited.
When you recognize that a cash flow crunch often comes as a result of your success it is often much easier to rationalize factoring as a solution.

Factoring in Canada is slowly catching on as a true financing option – many parts of the economy now view this financing method as a traditional method of financing the business – and the reality is that the big boys use it also , which many are not aware of .
When you utilize factoring you are in effect selling your receivables as you generate them (at your option of course) and receiving immediate cash for those funds. Don't let the literature fool you though – you actually receive approve 75-90% of your invoices (depending on who you deal with) and the balance is held back and then remitted to you when your customer pays. Naturally from this final holdback amount there is a financing fee or a discount fee. Many business owners view this financing or discount fee as an interest rate, when in fact the factor finance firms always refer to this as a discount fee.

The prerequisites for factoring your receivables often revolve simply around the nature of your receivables and customers. Your final pricing or discount fee depends on several key factors. They are:
- Overall risk profile of your firm – i.e. how you are doing!
- The quality of your customer base
- The size of your receivables portfolio
- The geographical scope of your invoices – foreign, i.e. U.S. receivables can be financed also.

What do you need to know about factoring financing in Canada as it relates to the U.S. and U.K. approaches to this type of financing ? Well in Canada there are two types of invoice discounting/factoring. Under the most commonly used method the factor firm you engage works with you to invoice the customer, collect the payment, and monitor the overall credit quality of your customer.
If you view this overall business model and way of financing as somewhat intrusive and undesirable then seek out the services of a trusted, credible and experience advisor who can provide you with a factoring facility which allows you to bill and collect your own receivables.

Many business owners we meet are concerned with the perception that comes from suppliers and customers when they find out you are factoring. That comes out of the issue that in the past many firms that factoring generally was viewed as companies with financial problems. However, the new reality of financing a business in Canada in the year 2010 is that factoring is in fact a great way for healthy businesses to generate much needed cash flow and working capital.

In summary, consider the cash flow benefits of financing your receivables when you are unable to obtain the total amount of financing you need. Determine if you are eligible (most firms are) and seek out a facility that meets your business financing needs.

factoring software

This entry was postedon Tuesday, June 1st, 2010 at 3:00 amand is filed under Uncategorized.You can follow any responses to this entry through the RSS 2.0 feed.You can leave a response, or trackback from your own site.

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Accounts Receivable Factoring

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Invoice Factoring Updates

From Entrepreneur:

Say you're a young startup–growing fast, but with little-to-zero positive cash flow–and you're straining to reach the next level or just to get through the end of the month. The bank-financing drought is showing no sign of letting up, and of course credit lines are reeled in tight.

What's the answer? For a growing number of startups, it is factoring. The practice involves a financing company, or “factor,” advancing you money based on its buying your receivables at a discount; your customers pay the factor the full value later, when the bill is due. Factoring gets you cash in hand immediately–but at a steep price. Factoring fees are much higher than interest rates charged by a commercial bank. Fees are quoted by the month, so a typical 3 percent fee is actually the equivalent of a 36 percent annual interest rate.

Dealing with a factor can also be much more difficult than with a commercial bank. Banks are highly regulated, offer competitive rates and commoditized lending services, so entrepreneurs can, with few exceptions, easily anticipate the cost and terms of their loan. But factoring is very fragmented. Most factor financing is provided by smaller, unconventional lenders. It is much less regulated and the quality, reliability and integrity of factors vary widely.

The reason more startups are turning to this more expensive, risky alternative is simple: It is often the only way to get cash. And if it is the route you decide to pursue, due diligence is the single most important step. Investigate how long the factor has been in business, where its offices and headquarters are and the background of its management team. Ask for referrals from current clients, and research complaints or lawsuits using web searches, the Better Business Bureau and the state's Attorney General's Office. Also, trust your gut: If you feel you can't build trust with the factor, don't pursue the loan.

If you go forward, review your contract with a magnifying glass, particularly these points:

What is the duration of the contract? The shorter the better–ideally, month to month. You want to switch to less expensive financing as soon as possible.Will the factor negotiate? Some factors allow contract negotiations while others offer only take-it-or-leave-it documents.Must you provide a personal guarantee? This allows the factor to go after you and your assets to be repaid. Some factors will lend without a personal guarantee or on a “non-recourse” basis.Will the factor take possession of your receivables if they are uncollected? Probably not, which means you'll need to collect on your own. Be prepared: If receivables are uncollected, you'll need to repay the factor's advance or you may lose financing altogether.How will the factor notify your customers? Ideally, the factor will create a lockbox to accept payments in care of your company. You maintain day-to-day contact with your clients so that everything appears seamless and they are not aware of your financial situation.Will you be required to factor 100 percent of your receivables? Cash flow and collections patterns fluctuate, and some weeks you may not need financing. If your factor requires you to finance all receivables, you will pay dearly for financing even when you don't need it. Single-invoice or spot factoring allows you to opt out.Is there a minimum or maximum sales requirement? Some factors require a certain sales volume. If you are not within the limits, you may lose your financing–so the fewer restrictions, the better.

Finally, always keep the end in sight. The real goal with factoring is to improve your cash flow, increase liquidity and rebuild net worth to qualify for commercial bank financing. Commercial bankers can help you figure out the financial targets that can help you re-qualify, but it is up to you to create the plan.

As a commercial lender, I have seen businesses resort to factor financing for one or two years at the most. If the company still didn't qualify for bank financing at that point, chances are, it was already out of business.

From Entrepreneur:

Say you're a young startup–growing fast, but with little-to-zero positive cash flow–and you're straining to reach the next level or just to get through the end of the month. The bank-financing drought is showing no sign of letting up, and of course credit lines are reeled in tight.

What's the answer? For a growing number of startups, it is factoring. The practice involves a financing company, or “factor,” advancing you money based on its buying your receivables at a discount; your customers pay the factor the full value later, when the bill is due. Factoring gets you cash in hand immediately–but at a steep price. Factoring fees are much higher than interest rates charged by a commercial bank. Fees are quoted by the month, so a typical 3 percent fee is actually the equivalent of a 36 percent annual interest rate.

Dealing with a factor can also be much more difficult than with a commercial bank. Banks are highly regulated, offer competitive rates and commoditized lending services, so entrepreneurs can, with few exceptions, easily anticipate the cost and terms of their loan. But factoring is very fragmented. Most factor financing is provided by smaller, unconventional lenders. It is much less regulated and the quality, reliability and integrity of factors vary widely.

The reason more startups are turning to this more expensive, risky alternative is simple: It is often the only way to get cash. And if it is the route you decide to pursue, due diligence is the single most important step. Investigate how long the factor has been in business, where its offices and headquarters are and the background of its management team. Ask for referrals from current clients, and research complaints or lawsuits using web searches, the Better Business Bureau and the state's Attorney General's Office. Also, trust your gut: If you feel you can't build trust with the factor, don't pursue the loan.

If you go forward, review your contract with a magnifying glass, particularly these points:

What is the duration of the contract? The shorter the better–ideally, month to month. You want to switch to less expensive financing as soon as possible.Will the factor negotiate? Some factors allow contract negotiations while others offer only take-it-or-leave-it documents.Must you provide a personal guarantee? This allows the factor to go after you and your assets to be repaid. Some factors will lend without a personal guarantee or on a “non-recourse” basis.Will the factor take possession of your receivables if they are uncollected? Probably not, which means you'll need to collect on your own. Be prepared: If receivables are uncollected, you'll need to repay the factor's advance or you may lose financing altogether.How will the factor notify your customers? Ideally, the factor will create a lockbox to accept payments in care of your company. You maintain day-to-day contact with your clients so that everything appears seamless and they are not aware of your financial situation.Will you be required to factor 100 percent of your receivables? Cash flow and collections patterns fluctuate, and some weeks you may not need financing. If your factor requires you to finance all receivables, you will pay dearly for financing even when you don't need it. Single-invoice or spot factoring allows you to opt out.Is there a minimum or maximum sales requirement? Some factors require a certain sales volume. If you are not within the limits, you may lose your financing–so the fewer restrictions, the better.

Finally, always keep the end in sight. The real goal with factoring is to improve your cash flow, increase liquidity and rebuild net worth to qualify for commercial bank financing. Commercial bankers can help you figure out the financial targets that can help you re-qualify, but it is up to you to create the plan.

As a commercial lender, I have seen businesses resort to factor financing for one or two years at the most. If the company still didn't qualify for bank financing at that point, chances are, it was already out of business.

This entry was postedon Monday, June 7th, 2010 at 12:01 amand is filed under Uncategorized.You can follow any responses to this entry through the RSS 2.0 feed.You can leave a response, or trackback from your own site.

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Accounts Receivable Factoring

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Invoice factoring pertains to the process in which smaller companies sell invoices

 

Factoring accounts receivable pertains for the process by which smaller companies sell invoices to be able to obtain funds these days. In this case they do not need to wait for a credit period of 30, 60, or 90 days. Thus by selling invoices smaller firms tend not to generate debt. This exercise of invoice factoring is basically employed as a finance management tool.

 

This practice of invoice factoring is typically adopted to avoid any loans or giving any collateral against availing any loan. The fee for invoice factoring is paid in terms of discount. This discount can ranger anywhere between 2.5% to 7%. Like a result of invoice factoring the smaller companies prevent exhibiting any loans on their balance sheets plus they also don’t have to spend any interest for the cash taken. This results in better profit figures but slightly different with buy order funding.

 

A number of companies also help tiny businesses in accounts receivable factoring. These businesses set up the firm with the perfect factor for any distinct factoring circumstance. If a person has an invoice or any receivable to become factored then these firms come out to assistance in the same.

 

These businesses assist the manufacturers, distributors, importers, exporters, wholesalers, contractors, suppliers etc equivocally. They also assistance truckers in construction invoice factoring. These organizations help to locate ideal aspect for any specific predicament within the area or can also aid to select from nationwide factoring organizations to avail the finest rates. They typically customized solution as per the clients require. To avail the services of such firms firstly a form needs to be filled out stating the type of receivables and other details needed for invoice factoring. Then these companies approach the probable paying parties that avail invoice factoring. Some of these organizations assume the risk inside the deal for non-recourse factoring wherever the client isn't necessary to invest back.

 

You'll discover different sorts of organizations with distinct forms of rates for factoring. Any invoices or receivables towards amount of $100,000 might be factored instantly. The average rate payable for discount in such cases is 2-5%.

 

Some businesses specialize for a specific category of invoice factoring. For instance, some companies indulge only in invoice factoring for medical business. Some firms, which cater to little and medium companies for invoice factoring, build invoices on the net and acquire immediate funding. They generally give a 24 hours turnaround. Other kinds of companies also give funds to small firms for their day to day operations against collateral of their invoice or buy order. These kinds of organizations also buy mortgage notes, structured settlement annuity or medical receivables.

 

This entry was postedon Sunday, June 13th, 2010 at 11:30 pmand is filed under Uncategorized.You can follow any responses to this entry through the RSS 2.0 feed.You can leave a response, or trackback from your own site.

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Accounts Receivable Factoring

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Invoice Factoring

List of Businesses

There probably isn't a day when Canadian business owners and financial managers don't hear about factoring and accounts receivable financing as a method of financing their business in Canada. Despite its growing popularity and, we can say, relative importance in the Canadian business financing marketplace this financing mechanism is still somewhat understood.

What information do business owners need to know in order to assess if factoring, also known as invoice discounting, is a viable transaction? Also, are there mistakes and pitfalls to be avoided when considering this financing strategy?

Let's examine the answers to some of those questions. You can be forgiven for trying to figure out why factoring has increased in prominence from a time when no one had almost ever heard of it! The answer to that popularity is more simply and obvious than you might think, and its simply that Canadian chartered banks are finding it increasingly more difficult to fund accounts receivable ( and inventory of course ) to the extent that their customers need this financing .

When you have a situation where the actual need for financing is acute, and the benefits and flexibility seems significant it is not hard to see the rise in popularity of such a financing mechanism.

First of all, 99% of the time, factoring provides your firm with a greater level of borrowing based on your accounts receivable levels. Quite of 90-100% of you're A/R under 90 days can be financed.

So is it all good news? Not necessarily, as we are always meeting with clients that have chosen the wrong type of funding or factoring, and, even worse, find them locked into contracts they cannot get out of. That is uncomfortable for any size firm as you can imagine.

As with any newer type of financing the playing field is complex. You can be forgiven for not knowing how many factor firms are out there, how they run, what their own limitations are, and , even to a certain extent, do they in fact themselves have the funding to survive, let along finance your firm . For that reason we cannot over emphasize the need to work with a credible, experienced and trusted professional in this area.

Lets talk about some of the nuances, we can call them potential 'pitfalls 'also, of picking the wrong factoring partner. For a starter if you choose a firm who itself is not well capitalized, as we said, you might find that the financing commitments made to you cannot be honored. Canadian business has never had to think that the Canadian chartered banks could be 'out of money 'but the Canadian landscape is somewhat littered with small and medium sized factor firms that do not have the financial wherewithal to support their funding commitments in all places. That just re – enforces our idea that a trusted industry expert will guide you to the best partner for your firm.

Other issues, again, we can call them pitfalls, to look for include:

- being locked into a contract
- having the total factoring cost , or pricing, not reflected properly in your term sheet
- advance rates which don't make sense relative to the price you are paying for discounting invoices
- excessive notification and intrusion with your customers , which is very prevalent in the U.S. model of factoring ( Many Canadian factor firms are branches of U.S. firms )

So let's recap. It's simply that factoring is growing in popularity. It works because it is providing funding where banks often cannot. If you don't understand who you are dealing with and the various nuances of this type of financing it becomes a burden, not a solution. Investigate this great financing mechanism, but ensure you know what you are getting into. Talking to an expert always helps – that's just common sense

This entry was postedon Thursday, June 17th, 2010 at 4:52 amand is filed under Uncategorized.You can follow any responses to this entry through the RSS 2.0 feed.You can leave a response, or trackback from your own site.

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Accounts Receivable Factoring

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Invoice Factoring Updates

  no commentsPosted at 12:01 am in Uncategorized

From Entrepreneur:

Say you're a young startup–growing fast, but with little-to-zero positive cash flow–and you're straining to reach the next level or just to get through the end of the month. The bank-financing drought is showing no sign of letting up, and of course credit lines are reeled in tight.

What's the answer? For a growing number of startups, it is factoring. The practice involves a financing company, or “factor,” advancing you money based on its buying your receivables at a discount; your customers pay the factor the full value later, when the bill is due. Factoring gets you cash in hand immediately–but at a steep price. Factoring fees are much higher than interest rates charged by a commercial bank. Fees are quoted by the month, so a typical 3 percent fee is actually the equivalent of a 36 percent annual interest rate.

Dealing with a factor can also be much more difficult than with a commercial bank. Banks are highly regulated, offer competitive rates and commoditized lending services, so entrepreneurs can, with few exceptions, easily anticipate the cost and terms of their loan. But factoring is very fragmented. Most factor financing is provided by smaller, unconventional lenders. It is much less regulated and the quality, reliability and integrity of factors vary widely.

The reason more startups are turning to this more expensive, risky alternative is simple: It is often the only way to get cash. And if it is the route you decide to pursue, due diligence is the single most important step. Investigate how long the factor has been in business, where its offices and headquarters are and the background of its management team. Ask for referrals from current clients, and research complaints or lawsuits using web searches, the Better Business Bureau and the state's Attorney General's Office. Also, trust your gut: If you feel you can't build trust with the factor, don't pursue the loan.

If you go forward, review your contract with a magnifying glass, particularly these points:

What is the duration of the contract? The shorter the better–ideally, month to month. You want to switch to less expensive financing as soon as possible.Will the factor negotiate? Some factors allow contract negotiations while others offer only take-it-or-leave-it documents.Must you provide a personal guarantee? This allows the factor to go after you and your assets to be repaid. Some factors will lend without a personal guarantee or on a “non-recourse” basis.Will the factor take possession of your receivables if they are uncollected? Probably not, which means you'll need to collect on your own. Be prepared: If receivables are uncollected, you'll need to repay the factor's advance or you may lose financing altogether.How will the factor notify your customers? Ideally, the factor will create a lockbox to accept payments in care of your company. You maintain day-to-day contact with your clients so that everything appears seamless and they are not aware of your financial situation.Will you be required to factor 100 percent of your receivables? Cash flow and collections patterns fluctuate, and some weeks you may not need financing. If your factor requires you to finance all receivables, you will pay dearly for financing even when you don't need it. Single-invoice or spot factoring allows you to opt out.Is there a minimum or maximum sales requirement? Some factors require a certain sales volume. If you are not within the limits, you may lose your financing–so the fewer restrictions, the better.

Finally, always keep the end in sight. The real goal with factoring is to improve your cash flow, increase liquidity and rebuild net worth to qualify for commercial bank financing. Commercial bankers can help you figure out the financial targets that can help you re-qualify, but it is up to you to create the plan.

As a commercial lender, I have seen businesses resort to factor financing for one or two years at the most. If the company still didn't qualify for bank financing at that point, chances are, it was already out of business.

From Entrepreneur:

Say you're a young startup–growing fast, but with little-to-zero positive cash flow–and you're straining to reach the next level or just to get through the end of the month. The bank-financing drought is showing no sign of letting up, and of course credit lines are reeled in tight.

What's the answer? For a growing number of startups, it is factoring. The practice involves a financing company, or “factor,” advancing you money based on its buying your receivables at a discount; your customers pay the factor the full value later, when the bill is due. Factoring gets you cash in hand immediately–but at a steep price. Factoring fees are much higher than interest rates charged by a commercial bank. Fees are quoted by the month, so a typical 3 percent fee is actually the equivalent of a 36 percent annual interest rate.

Dealing with a factor can also be much more difficult than with a commercial bank. Banks are highly regulated, offer competitive rates and commoditized lending services, so entrepreneurs can, with few exceptions, easily anticipate the cost and terms of their loan. But factoring is very fragmented. Most factor financing is provided by smaller, unconventional lenders. It is much less regulated and the quality, reliability and integrity of factors vary widely.

The reason more startups are turning to this more expensive, risky alternative is simple: It is often the only way to get cash. And if it is the route you decide to pursue, due diligence is the single most important step. Investigate how long the factor has been in business, where its offices and headquarters are and the background of its management team. Ask for referrals from current clients, and research complaints or lawsuits using web searches, the Better Business Bureau and the state's Attorney General's Office. Also, trust your gut: If you feel you can't build trust with the factor, don't pursue the loan.

If you go forward, review your contract with a magnifying glass, particularly these points:

What is the duration of the contract? The shorter the better–ideally, month to month. You want to switch to less expensive financing as soon as possible.Will the factor negotiate? Some factors allow contract negotiations while others offer only take-it-or-leave-it documents.Must you provide a personal guarantee? This allows the factor to go after you and your assets to be repaid. Some factors will lend without a personal guarantee or on a “non-recourse” basis.Will the factor take possession of your receivables if they are uncollected? Probably not, which means you'll need to collect on your own. Be prepared: If receivables are uncollected, you'll need to repay the factor's advance or you may lose financing altogether.How will the factor notify your customers? Ideally, the factor will create a lockbox to accept payments in care of your company. You maintain day-to-day contact with your clients so that everything appears seamless and they are not aware of your financial situation.Will you be required to factor 100 percent of your receivables? Cash flow and collections patterns fluctuate, and some weeks you may not need financing. If your factor requires you to finance all receivables, you will pay dearly for financing even when you don't need it. Single-invoice or spot factoring allows you to opt out.Is there a minimum or maximum sales requirement? Some factors require a certain sales volume. If you are not within the limits, you may lose your financing–so the fewer restrictions, the better.

Finally, always keep the end in sight. The real goal with factoring is to improve your cash flow, increase liquidity and rebuild net worth to qualify for commercial bank financing. Commercial bankers can help you figure out the financial targets that can help you re-qualify, but it is up to you to create the plan.

As a commercial lender, I have seen businesses resort to factor financing for one or two years at the most. If the company still didn't qualify for bank financing at that point, chances are, it was already out of business.

Written by Admin on June 7th, 2010

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Factoring is one of the best ways to help increase cashflow. If you haven't started yet, start searching for the best companies to factor your invoices now.Recent PostsInvoice Factoring Factoring receivables pertains for the practice in which smaller companies sell invoices Good Invoice Factoring Advice See some Factoring invoices Facts CategoriesFactoringUncategorizedArchivesJune 2010May 2010 Back to top

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Invoice Factoring Updates

By: Admin

From Entrepreneur:

Say you're a young startup–growing fast, but with little-to-zero positive cash flow–and you're straining to reach the next level or just to get through the end of the month. The bank-financing drought is showing no sign of letting up, and of course credit lines are reeled in tight.

What's the answer? For a growing number of startups, it is factoring. The practice involves a financing company, or “factor,” advancing you money based on its buying your receivables at a discount; your customers pay the factor the full value later, when the bill is due. Factoring gets you cash in hand immediately–but at a steep price. Factoring fees are much higher than interest rates charged by a commercial bank. Fees are quoted by the month, so a typical 3 percent fee is actually the equivalent of a 36 percent annual interest rate.

Dealing with a factor can also be much more difficult than with a commercial bank. Banks are highly regulated, offer competitive rates and commoditized lending services, so entrepreneurs can, with few exceptions, easily anticipate the cost and terms of their loan. But factoring is very fragmented. Most factor financing is provided by smaller, unconventional lenders. It is much less regulated and the quality, reliability and integrity of factors vary widely.

The reason more startups are turning to this more expensive, risky alternative is simple: It is often the only way to get cash. And if it is the route you decide to pursue, due diligence is the single most important step. Investigate how long the factor has been in business, where its offices and headquarters are and the background of its management team. Ask for referrals from current clients, and research complaints or lawsuits using web searches, the Better Business Bureau and the state's Attorney General's Office. Also, trust your gut: If you feel you can't build trust with the factor, don't pursue the loan.

If you go forward, review your contract with a magnifying glass, particularly these points:

What is the duration of the contract? The shorter the better–ideally, month to month. You want to switch to less expensive financing as soon as possible.Will the factor negotiate? Some factors allow contract negotiations while others offer only take-it-or-leave-it documents.Must you provide a personal guarantee? This allows the factor to go after you and your assets to be repaid. Some factors will lend without a personal guarantee or on a “non-recourse” basis.Will the factor take possession of your receivables if they are uncollected? Probably not, which means you'll need to collect on your own. Be prepared: If receivables are uncollected, you'll need to repay the factor's advance or you may lose financing altogether.How will the factor notify your customers? Ideally, the factor will create a lockbox to accept payments in care of your company. You maintain day-to-day contact with your clients so that everything appears seamless and they are not aware of your financial situation.Will you be required to factor 100 percent of your receivables? Cash flow and collections patterns fluctuate, and some weeks you may not need financing. If your factor requires you to finance all receivables, you will pay dearly for financing even when you don't need it. Single-invoice or spot factoring allows you to opt out.Is there a minimum or maximum sales requirement? Some factors require a certain sales volume. If you are not within the limits, you may lose your financing–so the fewer restrictions, the better.

Finally, always keep the end in sight. The real goal with factoring is to improve your cash flow, increase liquidity and rebuild net worth to qualify for commercial bank financing. Commercial bankers can help you figure out the financial targets that can help you re-qualify, but it is up to you to create the plan.

As a commercial lender, I have seen businesses resort to factor financing for one or two years at the most. If the company still didn't qualify for bank financing at that point, chances are, it was already out of business.

From Entrepreneur:

Say you're a young startup–growing fast, but with little-to-zero positive cash flow–and you're straining to reach the next level or just to get through the end of the month. The bank-financing drought is showing no sign of letting up, and of course credit lines are reeled in tight.

What's the answer? For a growing number of startups, it is factoring. The practice involves a financing company, or “factor,” advancing you money based on its buying your receivables at a discount; your customers pay the factor the full value later, when the bill is due. Factoring gets you cash in hand immediately–but at a steep price. Factoring fees are much higher than interest rates charged by a commercial bank. Fees are quoted by the month, so a typical 3 percent fee is actually the equivalent of a 36 percent annual interest rate.

Dealing with a factor can also be much more difficult than with a commercial bank. Banks are highly regulated, offer competitive rates and commoditized lending services, so entrepreneurs can, with few exceptions, easily anticipate the cost and terms of their loan. But factoring is very fragmented. Most factor financing is provided by smaller, unconventional lenders. It is much less regulated and the quality, reliability and integrity of factors vary widely.

The reason more startups are turning to this more expensive, risky alternative is simple: It is often the only way to get cash. And if it is the route you decide to pursue, due diligence is the single most important step. Investigate how long the factor has been in business, where its offices and headquarters are and the background of its management team. Ask for referrals from current clients, and research complaints or lawsuits using web searches, the Better Business Bureau and the state's Attorney General's Office. Also, trust your gut: If you feel you can't build trust with the factor, don't pursue the loan.

If you go forward, review your contract with a magnifying glass, particularly these points:

What is the duration of the contract? The shorter the better–ideally, month to month. You want to switch to less expensive financing as soon as possible.Will the factor negotiate? Some factors allow contract negotiations while others offer only take-it-or-leave-it documents.Must you provide a personal guarantee? This allows the factor to go after you and your assets to be repaid. Some factors will lend without a personal guarantee or on a “non-recourse” basis.Will the factor take possession of your receivables if they are uncollected? Probably not, which means you'll need to collect on your own. Be prepared: If receivables are uncollected, you'll need to repay the factor's advance or you may lose financing altogether.How will the factor notify your customers? Ideally, the factor will create a lockbox to accept payments in care of your company. You maintain day-to-day contact with your clients so that everything appears seamless and they are not aware of your financial situation.Will you be required to factor 100 percent of your receivables? Cash flow and collections patterns fluctuate, and some weeks you may not need financing. If your factor requires you to finance all receivables, you will pay dearly for financing even when you don't need it. Single-invoice or spot factoring allows you to opt out.Is there a minimum or maximum sales requirement? Some factors require a certain sales volume. If you are not within the limits, you may lose your financing–so the fewer restrictions, the better.

Finally, always keep the end in sight. The real goal with factoring is to improve your cash flow, increase liquidity and rebuild net worth to qualify for commercial bank financing. Commercial bankers can help you figure out the financial targets that can help you re-qualify, but it is up to you to create the plan.

As a commercial lender, I have seen businesses resort to factor financing for one or two years at the most. If the company still didn't qualify for bank financing at that point, chances are, it was already out of business.

« Nice Accounts receivable Factoring AdviceAccounts receivable factoring pertains to the process by which smaller businesses sell invoices »

Accounts receivable factoring pertains to the process by which smaller businesses sell invoices

By: Admin

 

Factoring accounts receivable pertains for the practice by which smaller businesses sell invoices to become able to obtain funds these days. In this case they don't need to wait for a credit period of 30, 60, or 90 days. Thus by selling invoices smaller firms tend not to generate debt. This exercise of invoice factoring is basically employed as a finance management tool.

 

This practice of invoice factoring is typically adopted to avoid any loans or giving any collateral against availing any loan. The fee for invoice factoring is paid in terms of discount. This discount can ranger anywhere between 2.5% to 7%. Like a result of invoice factoring the smaller companies prevent exhibiting any loans on their balance sheets plus they also do not have to spend any interest for the money taken. This results in much better profit figures but slightly various with buy order funding.

 

A number of companies also help tiny companies in invoice factoring. These businesses set up the firm with the perfect factor for any distinct factoring circumstance. If a individual has an invoice or any receivable to become factored then these firms come out to assistance in the same.

 

These businesses assist the manufacturers, distributors, importers, exporters, wholesalers, contractors, suppliers etc equivocally. They also support truckers in construction invoice factoring. These organizations help to locate ideal aspect for any particular predicament within the area or can also aid to select from nationwide factoring organizations to avail the finest rates. They typically customized solution as per the clients need. To avail the services of such firms firstly a form needs to become filled out stating the type of receivables and other details required for invoice factoring. Then these companies approach the probable paying parties that avail invoice factoring. Some of these organizations assume the risk inside the deal for non-recourse factoring wherever the client is not necessary to invest back.

 

You'll discover different sorts of organizations with distinct forms of rates for factoring. Any invoices or receivables towards amount of $100,000 might be factored instantly. The average rate payable for discount in such cases is 2-5%.

 

Some companies specialize for a specific category of invoice factoring. For instance, some businesses indulge only in invoice factoring for medical business. Some firms, which cater to little and medium companies for invoice factoring, build invoices on the net and acquire immediate funding. They generally give a 24 hours turnaround. Other kinds of companies also give funds to small firms for their day to day operations against collateral of their invoice or purchase order. These kinds of organizations also buy mortgage notes, structured settlement annuity or medical receivables.

 

« Invoice Factoring UpdatesInvoice Factoring »

Factoring receivables pertains for the practice in which smaller companies sell invoices

  no commentsPosted at 11:30 pm in Uncategorized

 

Invoice factoring pertains to the practice by which smaller companies sell invoices to become able to obtain funds these days. In this case they don't need to wait for a credit period of 30, 60, or 90 days. Thus by selling invoices smaller firms tend not to generate debt. This exercise of invoice factoring is basically employed as a finance management tool.

 

This practice of invoice factoring is usually adopted to avoid any loans or giving any collateral against availing any loan. The fee for invoice factoring is paid in terms of discount. This discount can ranger anywhere between 2.5% to 7%. Like a result of invoice factoring the smaller companies prevent exhibiting any loans on their balance sheets plus they also don’t need to spend any interest for the money taken. This results in better profit figures but slightly different with buy order funding.

 

A number of companies also assist tiny businesses in invoice factoring. These businesses set up the firm with the perfect factor for any distinct factoring circumstance. If a individual has an invoice or any receivable to become factored then these firms come out to assistance within the same.

 

These companies assist the manufacturers, distributors, importers, exporters, wholesalers, contractors, suppliers etc equivocally. They also assistance truckers in construction invoice factoring. These organizations assist to locate ideal aspect for any particular predicament within the area or can also aid to choose from nationwide factoring organizations to avail the finest rates. They typically customized solution as per the clients require. To avail the services of such firms firstly a form needs to become filled out stating the kind of receivables and other details required for invoice factoring. Then these companies approach the probable paying parties that avail invoice factoring. Some of these organizations assume the risk inside the deal for non-recourse factoring wherever the client isn't required to invest back.

 

You will discover various sorts of organizations with distinct forms of rates for factoring. Any invoices or receivables towards amount of $100,000 might be factored instantly. The average rate payable for discount in such cases is 2-5%.

 

Some companies specialize for a particular category of invoice factoring. For instance, some businesses indulge only in invoice factoring for medical business. Some firms, which cater to little and medium companies for invoice factoring, build invoices on the net and acquire immediate funding. They generally give a 24 hours turnaround. Other types of businesses also give funds to small firms for their day to day operations against collateral of their invoice or purchase order. These kinds of organizations also buy mortgage notes, structured settlement annuity or medical receivables.

 

Written by Admin on June 13th, 2010

« Invoice Factoring Updates Invoice Factoring » Leave a Reply

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Factoring is one of the best ways to help increase cashflow. If you haven't started yet, start searching for the best companies to factor your invoices now.Recent PostsInvoice Factoring Invoice Factoring Updates Good Invoice Factoring Advice See some Factoring invoices Facts CategoriesFactoringUncategorizedArchivesJune 2010May 2010 Back to top

© 2010 Small Business Factoring

View the Original article

Invoice Factoring

Most Canadian business owners and financing mangers often seek out factoring as a quick way to get out of a cash flow crunch when other more traditional methods of financing have been exhausted.

Typically clients tell us that sales or revenue generation is not the problem, with the bigger challenge simply being how to convert those sales into cash flow and working capital. Factoring comes at a higher price than traditional bank financing but most Canadian business owners recognize that other options are limited.
When you recognize that a cash flow crunch often comes as a result of your success it is often much easier to rationalize factoring as a solution.

Factoring in Canada is slowly catching on as a true financing option – many parts of the economy now view this financing method as a traditional method of financing the business – and the reality is that the big boys use it also , which many are not aware of .
When you utilize factoring you are in effect selling your receivables as you generate them (at your option of course) and receiving immediate cash for those funds. Don't let the literature fool you though – you actually receive approve 75-90% of your invoices (depending on who you deal with) and the balance is held back and then remitted to you when your customer pays. Naturally from this final holdback amount there is a financing fee or a discount fee. Many business owners view this financing or discount fee as an interest rate, when in fact the factor finance firms always refer to this as a discount fee.

The prerequisites for factoring your receivables often revolve simply around the nature of your receivables and customers. Your final pricing or discount fee depends on several key factors. They are:
- Overall risk profile of your firm – i.e. how you are doing!
- The quality of your customer base
- The size of your receivables portfolio
- The geographical scope of your invoices – foreign, i.e. U.S. receivables can be financed also.

What do you need to know about factoring financing in Canada as it relates to the U.S. and U.K. approaches to this type of financing ? Well in Canada there are two types of invoice discounting/factoring. Under the most commonly used method the factor firm you engage works with you to invoice the customer, collect the payment, and monitor the overall credit quality of your customer.
If you view this overall business model and way of financing as somewhat intrusive and undesirable then seek out the services of a trusted, credible and experience advisor who can provide you with a factoring facility which allows you to bill and collect your own receivables.

Many business owners we meet are concerned with the perception that comes from suppliers and customers when they find out you are factoring. That comes out of the issue that in the past many firms that factoring generally was viewed as companies with financial problems. However, the new reality of financing a business in Canada in the year 2010 is that factoring is in fact a great way for healthy businesses to generate much needed cash flow and working capital.

In summary, consider the cash flow benefits of financing your receivables when you are unable to obtain the total amount of financing you need. Determine if you are eligible (most firms are) and seek out a facility that meets your business financing needs.

« Accounts receivable factoring pertains to the process by which smaller businesses sell invoices

Invoice Factoring

Accounts Receivable Factoring

There probably isn't a day when Canadian business owners and financial managers don't hear about factoring and accounts receivable financing as a method of financing their business in Canada. Despite its growing popularity and, we can say, relative importance in the Canadian business financing marketplace this financing mechanism is still somewhat understood.

What information do business owners need to know in order to assess if factoring, also known as invoice discounting, is a viable transaction? Also, are there mistakes and pitfalls to be avoided when considering this financing strategy?

Let's examine the answers to some of those questions. You can be forgiven for trying to figure out why factoring has increased in prominence from a time when no one had almost ever heard of it! The answer to that popularity is more simply and obvious than you might think, and its simply that Canadian chartered banks are finding it increasingly more difficult to fund accounts receivable ( and inventory of course ) to the extent that their customers need this financing .

When you have a situation where the actual need for financing is acute, and the benefits and flexibility seems significant it is not hard to see the rise in popularity of such a financing mechanism.

First of all, 99% of the time, factoring provides your firm with a greater level of borrowing based on your accounts receivable levels. Quite of 90-100% of you're A/R under 90 days can be financed.

So is it all good news? Not necessarily, as we are always meeting with clients that have chosen the wrong type of funding or factoring, and, even worse, find them locked into contracts they cannot get out of. That is uncomfortable for any size firm as you can imagine.

As with any newer type of financing the playing field is complex. You can be forgiven for not knowing how many factor firms are out there, how they run, what their own limitations are, and , even to a certain extent, do they in fact themselves have the funding to survive, let along finance your firm . For that reason we cannot over emphasize the need to work with a credible, experienced and trusted professional in this area.

Lets talk about some of the nuances, we can call them potential 'pitfalls 'also, of picking the wrong factoring partner. For a starter if you choose a firm who itself is not well capitalized, as we said, you might find that the financing commitments made to you cannot be honored. Canadian business has never had to think that the Canadian chartered banks could be 'out of money 'but the Canadian landscape is somewhat littered with small and medium sized factor firms that do not have the financial wherewithal to support their funding commitments in all places. That just re – enforces our idea that a trusted industry expert will guide you to the best partner for your firm.

Other issues, again, we can call them pitfalls, to look for include:

- being locked into a contract
- having the total factoring cost , or pricing, not reflected properly in your term sheet
- advance rates which don't make sense relative to the price you are paying for discounting invoices
- excessive notification and intrusion with your customers , which is very prevalent in the U.S. model of factoring ( Many Canadian factor firms are branches of U.S. firms )

So let's recap. It's simply that factoring is growing in popularity. It works because it is providing funding where banks often cannot. If you don't understand who you are dealing with and the various nuances of this type of financing it becomes a burden, not a solution. Investigate this great financing mechanism, but ensure you know what you are getting into. Talking to an expert always helps – that's just common sense

Written by Admin on June 17th, 2010

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Factoring is one of the best ways to help increase cashflow. If you haven't started yet, start searching for the best companies to factor your invoices now.Recent Posts Factoring receivables pertains for the practice in which smaller companies sell invoices Updates Good Advice See some Factoring invoices Facts CategoriesFactoringUncategorizedArchivesJune 2010May 2010 Back to top

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