Summary: Most trucking companies encounter cash flow problems at one point or another. This happens because managing a trucking company’s cash flow is challenging. Cash flow problems occur because most expenses are immediate while revenues are delayed by 30 to 60 days. This situation creates a gap in your cash flow that affects your ability […]
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Invoice Factoring for Small Companies
Summary: Small business owners often have difficulties finding the right financing for their companies. The lack of financing can prevent business owners from taking on growth opportunities. It also makes it harder to operate the business and handle challenges. This article explains invoice factoring, a financing product that helps small companies improve their cash flow. […]
Who Can Use Purchase Order Financing?
Purchase order (PO) financing is a flexible product that can help small companies handle large sales. However, PO funding has some limitations and is not for every company. This article helps you understand PO financing and determine if your company is a good candidate for it. The following topics are discussed: 1. What is purchase […]
How Do Factoring Companies Verify Invoices?
Factoring companies verify customer invoices as part of the financing process. This article explains why factoring companies verify invoices, how they do it, and how they manage potential issues. We cover: Factoring basics Why are invoices verified? How are invoices verified? What happens if there is a problem? Managing customer expectations 1. Factoring basics Factoring […]
Why Can’t I Combine Factoring with a Business Loan?
Getting a factoring line if you already have financing in place is difficult. Factoring companies can finance your invoices only after they secure a first UCC position on your accounts receivables. This requirement often conflicts with your current lender’s collateral position. This article explains how loans and factoring lines are secured and provides the criteria […]
Construction Factoring and Retainage Payments
Most construction subcontractors are familiar with the concept of retainage, also called retention. Basically, their general contractor (GC) withholds 5% to 10% (varies) of their payments until the project is completed. General contractors use this practice because withheld funds can be used to fix any issues with the work. Additionally, withheld funds are an incentive […]
Understanding the Factoring Rebate
Most factoring transactions are structured as the purchase of an invoice in two installments. The first installment, usually 70% to 90% of the invoice, is the factoring advance. The second installment, the remaining 15% to 30% (less fees), is the rebate and is usually paid once the customer pays the invoice in full. At least, that […]
What is the Factoring Advance?
Most clients are initially perplexed to hear that the factoring advance, which is paid as soon as the invoice is sent to the factoring company, is less than the full value of the invoice. Most factoring companies advance between 70% and 90% as a first installment and hold 10% to 30% of the invoice as […]
How to Finance a Pallet Manufacturing and Distribution Company
Running a pallet manufacturing and distribution company can be challenging. You have to manage the logistics of your supply and vendor chain while tracking your customer orders – all while keeping an eye on your cash flow to make sure you can keep the business running. Managing cash flow can be tricky, especially for companies without big capital reserves. […]
How to Finance a Machining and Metalworking Company
Summary: Most industrial and commercial clients pay invoices on net-30 terms. However, offering net-30 terms can create cash flow problems for machining companies that aren’t well capitalized. This article shows how you can solve this problem by improving operations and financing your invoices. We cover the following: 1. Are you offering payment terms? One of […]