Factoring FAQ

What is Factoring?

Factoring is the discount of account receivables (domestic or international). This widely used financial product allows your company to turn your account receivables into immediate cash, improving your liquidity and cash flow. Factoring releases cash from invoices of sold products or services allowing businesses to increase their cash flow thus creating solutions for paying staff, buying inventory and covering overhead costs.

How does it work?

Your company, referenced as (the client) sells its products or services to your client, (the debtor) and you issue an assigned invoice for the goods or services sold. Your client accepts your products and or services and the re-assignment of payment to the factor. Once the factor has confirmation of delivery of services or products, the factor disburses up to 85% of the invoice amount to you (the client). The factor receives payment for the goods and or services from (the debtor) at a time previously agreed to ei; 30-60-90 days from the invoice date. The factor then releases the remaining 15% to you (the client) minus the factors’ fees and charges.

Why Factoring is necessary?

Factoring is one of the most flexible forms of financing. Businesses have come to the conclusion that Factoring can help level the playing field, when encountered with cash flow issues. Your business can take advantage of having liquidity within 24 hrs, helping you meet financial obligations, reduce operating expenses, increase sales and paying your creditors on time.

What is Account Receivables Factoring?

Is the sale of your account receivables to a factor, which will advance to the client a percentage of the invoice amount and will retain the remaining percentage until the factor is paid by the debtor. The advancement is then used by the company to buy additional raw materials to produce more products to sell or to pay outstanding debt earlier.

How much can a Factor advance my company?

Advances are determined by the overall risk each company, industry or client present to the factor at the time of risk review. Standard advance rates vary anywhere from 70% to 90% or higher of the gross invoice amount. (Depending on the industry type).

How much does it cost?

An initial consultation with one of our financial advisors will give you a better idea as to the cost. Factoring cost vary depending on the risk of the transaction. Pricing and interest charges are considered competitive vs. other forms of commercial finance.

What is the difference between a traditional bank loan and factoring?

Traditional banks scrutinize extensively the applicant, (your business) for their ability to repay the loan. Not many small sized businesses will fair well through the application process which can be lengthy and cumbersome. At the end the business owner may end up with a denial of the loan or a reduction of the loan amount and still remain in a precarious financial situation. Factors rely heavily on the financial strength of your clients, (the debtors) allowing small sized businesses to be competitive without having to incur additional debt. Factors can assist start up businesses, businesses in rapid growth mode or those that are turning their finances around.

What is Credit Protection & why do I need it?

Our credit protection reduces your exposure to your client’s non-payment due to insolvency or lack of liquidity. You need credit protection because you are lending your money to your clients without security of payment. Your account receivables are an integral part of your business assets; non payment of your receivables can have detrimental effects on your company’s bottom line.

Start Factoring in Less Time than it Takes to Submit a Bank Loan Application

Your company is trying to obtain a traditional bank loan but they keep turning you down. Are there other alternatives?

The answer is YES; put your biggest and best assets to work for you.

Your Account Receivables can give you greater liquidity and cash flow while your business is in its growing stages.

If your clients are:

Credit worthy
Are paying you as agreed

Invoice Funding is one of the fastest and simplest forms of funding your business.

There is no need for your company to have a lengthy credit history, just good paying clients.

CV Credit will review the credit worthiness of your clients and rely heavily on their financial strength to provide you with cash flow financing.

Purchase order financing is another valuable tool offered by CV Credit, Our clients can purchase additional inventory and materials to produce new products and sell to their clients. One of our representatives can offer full details on how to with purchase order financing.

Your Assets Can Give You Working Capital

CV Credit provides asset based lending solutions. Your assets, specially your accounts receivables and inventory can be a good source of cash flow and liquidity.

Accounts receivables, inventory, equipment are all forms of assets which can yield your business the needed cash to pay payroll, overhead expenses or buy more products. Ask one of our financial advisors how CV Credit’s asset based lending can help your company grow.

Obtain a Factoring Quote Now

305-792-2366

Info@cvcredit.com