05 يناير
Factoring Companies

Everythings About Factoring Companies

First of all, you may need a definition for the term "Factoring ", simply if you have a company or a project and you are committed to a specified financial balance, then you suddenly find a critical problem in the cash flow " the amount of money going in or out your financial plan", you actually have receivables with clients but you are into a long term financial cycle and you didn't predict this shortage! What shall you do?

Here comes the "Factoring", you can sell your receivables and invoices to the factor at a discount, the factor will pay you instantly your cash so you can solve your financial shortage.

This helps going on with your business, in fact this is an instant solution that solves the lack in cash flow but you will lose the amount of fees that will be discounted as factor fees.

The factoring companies pays you about "from 70% to 90%" from your total outstanding invoices value, and the factoring company will check and investigate the creditworthiness of your customers and if they will be able to pay their invoices on the specified time that you agreed to, this is so important step as the factoring company is not a collection agency, so if you want to close the deal well with the factoring company you have to make your invoices in order, and in a very good standing case, and may the factoring company put in their consideration your annual revenue and whether the period you have been working in this period is long or short.

After closing the deal and selling your outstanding invoices that have been analyzed and inspected by the factoring company, the company requested payments from the customers by sending them message or email with a notice that they have just received the service of collecting cash of outstanding invoices from your company and you also can inform your clients that you handed over the future payments and invoices to the factoring company.

Okay, now you have received about 80% of your payments so what about the 20% ? "do not forget the fees of the factoring company for sure", all the remaining cash will be transferred to you once the factoring company received them from the customers.

The above scenario is being typically applied for most of the factoring companies, but new companies followed newer services and have new systems lunched which are more convenient and accommodating to small projects and business or the individual business.

Factoring Companies

Some factoring companies don not pay you 80% of your outstanding invoices payment value, otherwise the pay you 100 percent of your future payments, they will cover all the outstanding invoices without making you wait the customers to pay their invoices in a long term to get all your money as a package,  and their fees will be charged when you repay them, so you do not have to pay the fees while you do not actually have money as the other factoring companies deduct their fees from the money you are not actually having got yet!

Other factors do not notice your customers that they have received the responsibility of collecting cash, otherwise they keep the customers know that you are the one who still in charge of collecting your invoices, so services differ from company another and each company has their benefits in a different way.

  • The most common "factoring companies":

  • Fundbox:  

One of the best invoice financing for the small business projects is Fundbox, it considered one of the easiest invoice financing as they offer instant and fast payment, and presents amazing repayment plans with a very good customer service.

Their fees is about from 5 to 7 percent from the total invoice value and funds the total 100 percent value of invoices amount instantly , their requirements are not complicated as the less period you have to be in this business is just 6 months and they do not consider the annual revenue of your company and they work without checking credit.

This is so ideal for small business with the lowest barrier I think and the fast funding will be really useful for small or individual projects and businesses.

  • DealStruck :

This company combines the traditional loans in business, credit receivable lines accounts and credit inventory lines, they empower and help businessmen to achieve their financial goals.

The terms can be up to 48 months they have no problem with this which is enough time to make sure that you will be able to pay back the loan amount fully.

  • Gateway Commercial Finance :

This company does not specified in some kinds of industries, they deal with a wide variety of industries, they have no minimums and they have no maximums of invoices amounts, they provide you with a soft call which helps to keep the clients information secret.

  • 1st Commercial Credit

They cooperate and deal with international branches, and provide clients with export trade financing allover world market, they have fast quote as you can fill out online form to get the instant accurate quote for your needs.

The factoring decisions are not depending on specific process or the strength of client's credit, they provide clients with their services across the board allover many kinds of industries.

They deal with all sizes of projects or business not a specified size or industry.

  • Some factoring companies are specified in particular industries, such as Capital Plus which specializes in the field of construction and works with construction companies, another example is Paragon Financial which specifies and specializes in tax problems.

At the end, you have to study well your needs and the services that benefit you and rescue your financial position then choose a factoring company that makes your financial statue stable and don't afford you huge fees, if you have a small business you have to be aware of the financial issues and it is better to study the financial methods well and study the market as well as the competitors.