Cost of Factoring

Every time you extend credit or terms to a customer, you act as a banker in lending the money until it is collected. In effect, you loan your customer money for 30 days, 60 days, or 90 days, INTEREST FREE.

EXTENDING CREDIT impacts your business in three ways:

  1. You lose interest that you could have earned, even if you put it into a low interest savings account.
  2. You can't take advantage of purchase discounts from your vendors if the funds are not available.
  3. You may lack the capital to produce the next job, and may be forced to decline profitable deals from good payers.

The longer your customer takes to pay, the greater the impact upon your company. Now the invoices that you issue to your customers can be exchanged for cash and reinvested in your business! Our factors will typically advance your company 70% to 80% of the invoice within 24-48 hours after your account has been approved and set up initially. When full payment is received on the invoice, the factor pays you the remaining balance minus the fee. If you factor through us on a regular basis, there is no setup time every time - just the first time.

Factoring fees are generally in the 2.5% to 4.5% range for each 30 day period. Factoring fees are based upon these variables:

  • Factored sales volume
  • Average invoice size and number of invoices
  • Terms of sale for each invoice
  • Quantity and type of customers (the credit strength of your customers and their payment history)
  • Industry conditions
  • Recourse or non-recourse

For Example: If an invoice is paid within 30 days, your company will receive 95.5% to 97.5% of the invoice total. All our fees are competitive; our terms are flexible and our response time is very fast.

 		 

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