FREQUENTLY ASKED QUESTIONS
CAN I FACTOR ALL OF MY RECEIVABLES?
You can factor all of your receivables. We’ll discuss the most efficient and cost effective receivables to factor. You want to factor receivables from good paying clients. When clients delay payment, fees accrue.
CAN I FACTOR MY GOVERNMENT RECEIVABLES?
Yes – many banks and factoring companies steer clear of government receivables. With over 25 years of experience in working with government contracts, we understand businesses that support government clients, and we are equipped to support them.
WHAT IS THE DIFFERENCE BETWEEN FACTORING AND BORROWING AGAINST MY A/R?
When you borrow against your receivables, the bank gives you a line of credit that allows you to borrow funds against your allowable receivables. This line of credit will come with a list of covenants regarding your profitability, client concentration, and you must zero out your line of credit at least once each year. Your balance sheet reflects this borrowing as a liability – which is offset by the borrowed cash as an asset.
When you factor an invoice, you are selling an asset as a discount. Your balance sheet reflects this as a conversion of one asset (invoiced receivable) to another asset – cash.
WHAT CAN I USE THE CASH FOR?
The reason we are here is to see your small business succeed. We’d like to see you use the cash to help stabilize or grow your business. You can use the money to buy new equipment or hire employees necessary to get and perform on new projects. You can also use the money to meet current obligations – like payroll or taxes.