Factor as much as your want or as little as you want. You decide.
No obligations. No binding contracts.
There are No minimums and No maximums in the amount you can factor.
Funding is based on the strength of your customers.
· It stimulates cash flow.
· There are no stipulations about how to use the money.
· It does not create debt on your balance sheet.
· It increases your purchasing power, enabling you to
do more business.
· Eliminates the need for bank loans or SBA Loans.
· Improves your credit rating, and gives you cash to meet
· Eliminates using equipment, real estate or inventory
· Saves on your in-house staff costs.
Presents a professional image to your clients.
· Eliminates the need for venture capitalists or partners
that share in decision-making and profits.
· Receive credit reports at reasonable rates.
enable you to meet payroll, pay your taxes on time, and eliminate
the need to file bankruptcy.
Frequently Asked Questions
How does accounts receivable funding work?
put, accounts receivable funding is the purchase of accounts receivable
business at a discount. It is designed for businesses that need money
immediately, and can't afford to wait 30, 60, or 90 days for a customer
to pay. In most cases, either the business owner can't meet his cash
demand (because, for example, his customers are slow to pay or income
is low due to a seasonal slowdown), or his business is growing so
rapidly that its cash flow can't keep up with its growth.
you factor your invoices, you will receive most of the invoice value
(70-85%) immediately. When a customer finally pays their
invoice, you get the remainder of the invoice amount, minus a small
factor fee that is based on the time it took for the invoice to
be paid. The factor fee schedule is established up front in an agreement
between you and the factor, then your monthly factoring process is as
simple as sending a copy of each invoice to the factor as well as your
What type of business can take advantage of this alternative funding
Any business that generates an invoice and delivers a verifiable product
or service qualifies.
Can a business with a history of bad credit (or a new business with
no credit) qualify?
Another benefit of accounts receivable funding is that it depends on
your customers' creditworthiness, not yours. (And, as part of our service,
we do the research to assess your customer's creditworthiness for you.)
Can my business qualify if we already have existing credit lines, SBA
loans or are a debtor in possession (Chapter 11)?
Yes! Our credit line complements any loan you may have or are seeking.
We work with your existing lenders to enable you to access additional
How much will it cost me?
HB Capital Strategies
can work with multiple funding sources to find you the best deal. The
fees will depend on the answers to the following questions:
What terms do you give your customers?
How long does it actually take your customers to pay?
What is the size range of your invoices?
Where do most of them fall in that range?
Who are your customers? What are your monthly or annual sales?
What is your gross profit margin?
What are your accounts receivable right now?
How much is current, i.e. under 30 days?
How much is over 90 days old?
How much bad debt did you write off last year?
Are there any liens or judgments against your firm?
Are there (SBA) loans, credit lines, or bankruptcy?
Must I agree to finance a minimum volume of future receivables?
No. Finance one invoice or as many as you need to meet your cash flow
needs. Stop or continue as needed. You decide all the time.
Q. Many of my customers pay in 60 days or longer. Can I afford it?
has many solutions for you to make it affordable:
First, you could factor just the quick paying customers
since they would be your least expensive source of cash. The fees would
be less and the reserves would be paid sooner.
Secondly, you could delay the funding of invoices for
30 days so that you would only pay 30 day fees on your 60 day payers.
In the process you’ve converted all your customers into the equivalent
of 30 day payers!
Third, use this service as a factoring credit line. Submit
your invoices as you generate them, but draw advances only when and
in the amounts needed. The fees will be pro-rated, i.e. you’ll pay fees
in proportion to the funds and the time that are used. If you take half
of the normal advance, the fees will be half and you’ll always be in
complete control of your cash flow.
Q. How much of the invoice value do you advance?
Typically, in the 70-85% range. However, this question is relevant only
to the first month. In the second month you receive the current
advance and the reserves from last months’ paid invoices. After the
first month you are virtually COD, so the percent of advance isn’t really
Q. When I use factoring services, where does my customer send the payment
and who is the payment written to?
A. The payment is mailed to the Factor, and the check is written to
the Factor. The Factor is the collector of the payment.
Q. How will my customer know to send the invoice payment to the Factor?
A. When you open a factoring account, your company will send a letter
to your customer identifying the factoring company and ask to accept
their requests for payment on your behalf. Afterwards, the Factor will
subsequently send letters to your customer asking them to redirect payment
for each invoice you choose to factor.
Q. What will be the impact on my customer, and how might it change our
The only difference to your customer is where to send the payment and
who the payment is made out to. In fact, your customer relationship
will most likely improve with factoring services. You no longer have
the uncomfortable task of collecting payment from your customers, the
Factor will now assume that role as an independent third party. Now
you can keep your conversations with your customers strictly about business
and leave the topic of collecting payments to the Factor.
Q. How does the Factor treat my customer? How do they present themselves
Factor treats your customer with the utmost business professionalism
and presents themselves as an accounts receivables management service
that has just given your business an unlimited credit line. After all,
the Factor has a vested interest in your customers satisfaction and
would never want to do anything to upset them and loose their business
(and yours). The Factor communicates to your customer through letters
and telephone calls. The letters ask your customer to redirect invoice
payments and the phone calls are only to verify the existence of an
invoice. Should your customer begin to default on payments the Factor
will raise the issue with you first before speaking to your customer.
Q. What happens if my customer refuses or is unable to pay an invoice
that I have sold to my Factor?
on what type of factoring agreement you have in place with your Factor.
The two main types are Recourse and Non Recourse
factoring. Most factoring companies will only do one or the other.
What is Recourse Factoring
the event that a Debtor does not pay the invoice, recourse factoring
allows the Factor to come back to the Seller for payment. The risk of
insolvency does not transfer to the Factor when an invoice is purchased.
If a customer refuses or is unable to pay the invoice (due to bankruptcy),
you (the Seller) must buy back the unpaid invoice or exchange it with
another receivable of equal or greater value. Since Recourse Factoring
offers the least amount of risk to the Factor, this factoring agreement
offers the lowest fees.
What is Modified Recourse Factoring
modified recourse factoring the Factor carries receivables/credit insurance
and offers protection to the seller if the customer is unable to pay
the invoice due to financial failure or bankruptcy. However, if the
customer refuses to pay the invoice from a dispute over quality, delivery,
or specifications, the factor has recourse back to the seller's other
What is Non Recourse Factoring
Non Recourse factoring the risk of insolvency and non-payment is completely
transferred to the Factoring company. If the customer goes
bankrupt or refuses to pay the invoice (for whatever reason), the
Factor cannot come back to the Seller for payment. This method
of factoring carries more risk for the factoring company and therefore
factoring fees are higher.
Versus Bank Loans
In many situations, factoring is more appropriate than bank financing,
· Is based only on the strength of your invoice(customers). A client’s ability to raise cash
by factoring is based on the total accounts receivable, rather than
on traditional measures of financial strength and stability of your
Provides continuing cash flow with no
requirement of periodic payments
or interim payoffs. New sales continuously create new power
to obtain cash, and the business does not have to deal with renewal
of loans or worry about maturity dates. No
Gives a business unlimited access
to cash as sales and receivables increase. There
is no ceiling
beyond which the factor must stop providing cash. The more sales
a business makes, the more cash it can draw. The factor does not concentrate
on the business debt/equity ratio to provide funds, as banks do.
· Offers a dependable, continuing source
of cash without the necessity of making separate
loan applications. There is only one setup process, then
you control how much and how often. It's like a cash machine you
can utilize whenever the need arises. If you need more cash, send
us another invoice. You control the relationship, always!.
Avoids the necessity of obtaining funds from venture capitalists, who
receive an interest (ownership) in the business and generally have a
say in how the business is run. You
retain management control.
Saves time and allows you to focus on running the business. The business owner isn't
waiting for a Loan Board to grant or deny his or her loan. Loan Boards’
decisions are influenced by many considerations, and the outcome is
often unpredictable. With factoring, periodic delays and negotiations
are eliminated, allowing the business owner time to do what he or she
does best – run the business.
What does this mean for you?
Any government contractor, under the the
of Claims Act of 1986, may assign it's rights to be paid
amounts due or to become due as a result of the
performance of a contract to a bank, trust company or
other financing institution.
Larger vendors have
been doing this for years.
Simply put, the U.S. Government encourages their vendors to seek accounts
receivable factoring of their invoices in order to help them grow, improve
cashflow, increase performance, and level the playing field. Access
Unlimited Capital using the creditworthiness of the US Government !!!
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