Summary: All forms of business financing involve risk, and invoice factoring is no exception. In this article, we outline the primary risks associated with factoring and provide detailed strategies to mitigate your risk. These strategies will improve your chances of success. We cover the following: 1. What is invoice factoring? Invoice factoring allows companies to […]
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Borrowing Base Calculator for Asset-based Loans
The following calculator helps estimate the available funds in an asset-based loan (ABL). You can modify any editable field, and the calculated values will update automatically.For a detailed explanation of borrowing base certificates and the meaning of each field, read “How Does a Borrowing Certificate Work?“ How to use the calculator Enter or modify the […]
Financing Options for Distressed Lower Middle-Market Companies (“Special Assets”)
Summary: Middle-market companies that are out of compliance with their lenders are typically assigned to the Special Assets group. Usually, these companies must find a new lender as part of their workout process. Few lenders finance distressed companies in this market segment. Consequently, finding a replacement lender can be a significant challenge for lower middle-market […]
Cash Conversion Cycle Calculator
The cash conversion cycle measures how long it takes your company to sell it’s inventory. collect invoices, and pay vendors. It’s an important metric because it shows how efficiently your business turns operating activity into cash. An increasing cash conversion cycle may indicate that cash is tied up for longer. This can happen because of […]
DSO Calculator
Days Sales Outstanding (DSO) measures how long your customers take to pay their invoices, on average. It’s an important metric because it provides a general gauge of your collections performance. An increasing DSO may indicate collection delays and potential cash flow problems. Formula: DSO = (Average Accounts Receivable ÷ Total Credit Sales) × Number of […]
How Does a Borrowing Base Certificate Work?
A borrowing base certificate is a document that a company uses to draw funds from its asset-based loan (ABL). The certificate is typically used in ABLs secured by accounts receivable since these loans are structured as revolving lines. This article explains how borrowing certificates work and covers the following: 1. What is a borrowing certificate? […]
DPO Calculator
Days Payable Outstanding (DPO) measures how long your company takes to pay its suppliers, on average. It’s an important metric because it provides a general gauge of how your business manages supplier payments and cash flow. An increasing DPO may indicate that your company is taking longer to pay bills. This can improve short-term cash […]
DIO Calculator
Days Inventory Outstanding (DIO) measures how long your company holds inventory before it is sold or used, on average. It’s an important metric because it provides a general gauge of your inventory management efficiency. An increasing DIO may indicate slow-moving inventory, excess stock, or potential cash flow problems. Formula: DIO = (Average Inventory ÷ Cost […]
Factoring Cost per Dollar Advanced Calculator
This calculator helps you compare two factoring proposals based on the advance rate and the factoring rate. This approach is useful because the lowest quoted rate is not always the lowest-cost option once the advance rate is considered. Table 1: Transaction Assumptions Enter the invoice amount and factoring period used for both options. The factoring […]
Asset-Based Loan Qualification Requirements
Summary: Asset-based loans are commonly used by small and middle-market companies that need financing. Their main advantage is that they offer a flexible structure and support several types of collateral. Asset-based loans are popular with companies because these loans have fewer covenants and simpler qualification requirements than bank financing. Read “What is an Asset-Based Loan? […]