Factoring Facts

The Benefits of Factoring Can Help You:

Here is just a sample of the services and features that we can provide you

Invoice Processing - We will mail out your invoices to customers, pay for the postage, post invoices to the computer,deposit checks, enter payments and produce regular reports. All you need do is generate an invoice as you normally would and we take care of the rest

Credit Management and Consulting - Our extensive credit and accounts receivable assistance is available at no charge and is often less costly than maintaining your own in-house credit department. We serve as your credit department, accounts receivable department, and collection department.

Courteous Collection - We understand the relationship you have with your customers, we do not use heavy handed techniques to collect your invoices. We work with your customers so they understand factoring and how it helps you serve them better.

Back Office Support - We can help you reduce the mailing, time and collections on your accounts receivables.

Same Day Funding - We will buy your invoice and give you an advance in the first 12 to 24 hours that you supply us with invoices for goods and services that have been shipped and accepted.

Processing - We will buy your invoices from a faxed copy of the invoice. Just send us the original invoices in the envelopes provided so we can mail out the originals for you.

No Long Term Contracts - You can give us thirty days written notice to terminate our services any time.

No Start Up Fees - You are charged only for the invoices we buy from your company.

Short Application Process - We have a short application and we try to keep our application process down to five days or less.

The First Step: The Client profile

You begin by filling out a simple client profile, which we will provide you. This profile will cover basics such as your company's name and address, the nature of your business, and information about your customers.

You may need to supply an accounts receivable aging report, existing customers' credit limits, or other related documents. Remember the factor will attempt to determine the creditworthiness of your customers independent of their credit history with your business. We want a broader view of their overall credit status.

During this initial stage you will also cover basic financial arrangements with the factor. For instance, what will be the monthly volume of invoices you want to factor (i.e. how liquid do you need to be)? What will the advance rate and the discount rate be? How quickly will the factor issue the advance to you?

In most cases, the answers to these questions will vary depending on the financial strength of your customer(s) and the anticipated monthly sales volume to be factored. Variations between industries, length of time in operation, and general reputation of how risky a customer of yours may be. For instance, a long list of high-risk clients will cost you more in factoring fees than a short list of government agencies with a slow-pay history.

In the factoring business, volume is all important. The higher your volume (the dollar amount of invoices you factor), the more favorable your rates will be.

The factor will use the client profile you submit to determine if your business is suitable for factoring. This process is simply the factor analyzing the risks versus the rewards, using the information you provided.

Once approved, you can expect to negotiate terms and conditions. The negotiation process takes several aspects of the deal into consideration. For instance, if you want to factor $10,000, you can't expect as favorable of discount and transaction rates as a company that wants to factor $500,000.

During the negotiation process, you will become well aware of what it costs to factor your accounts receivable. After you reach an agreement with the factor, the funding wheels begin to roll. The factor conducts due diligence by researching your customers' credit and any liens placed against your company. The factor also confirms the legitimacy of each invoice before buying your receivables and advancing cash to you.

Factoring History

Whether you own a business, look forward to building one or are looking for new financial tools for your current employer, factoring can help you reach your financial goals.

Factoring has the ironic distinction of being the financial backbone of many of America's most successful abusiveness. Why ironic? Because factoring is not taught in business colleges, seldom mentioned in business plans and is relatively unknown to the majority of American business people, yet it is a financial process that frees up billions of dollars every year, enabling thousands of businesses to grow and prosper.

Factoring is the process of purchasing commercial accounts receivable (invoices) from a business at a discount. Business practices today dictate that in order to get business you, as a provider of goods and services, must extend terms to your customers. These terms can squeeze the life (and cash is the lifeblood of any business) out of a new or struggling company.

By assisting clients in determining the creditworthiness of their customers and setting credit limits, factors could actually guarantee payment for approved customers. This is known as factoring without recourse (or non-recourse factoring) and is quite common in business. Today, factors exist in all shapes and sizes: as divisions of large financial institutions or, in larger numbers, as individually owned and operated entrepreneurial endeavors.

Many of these private factors sprung up in record numbers as interest rates rose to new heights in the 60's and 70's. This trend intensified in the 80's, primarily due to the increasing impact of interest rates and changes in the banking industry. With banks becoming too expensive and too inflexible due to heavy regulation (remember the Savings and Loan crisis?), the small businessperson was forced to find other sources of financing for expansion and growth. And as more and more banks stop befriending the small businessperson, factoring is becoming an increasingly popular option.

This year alone thousands of businesses will sell billions of dollars in accounts receivable, and they are doing it for profit, growth, and in some cases, their very survival.

TriMark Capital Funding, Inc. is in the unique position of representing factors that serve every industry. And because of our unique relationships, we can help you solve your cash flow needs quickly and efficiently.

Is Factoring For You?

The key to knowing if factoring is for you is to not to look only at the bottom-line factoring fee, but also to consider how your company may increase it's profits through factoring.

Here is additional information on factoring to help you with your decision.

How are fees and advance rates determined? It is based on several factors:

What is an advance? The amount of money you receive immediately when we buy your invoice. The balance is returned to you when your customer pays the invoice. Advances range from 60-95% of the invoice's face value. For example if the invoice's value is $1,000 an advance rate of 80% equals $800. The balance of $200 less the factoring fee is returned to you when your customer pays the invoice.

What is a Discount Fee? The percentage of the face value of an invoice that a factor holds as its payment for factoring your invoices. This fee is deducted from the holdback amount held by the factoring company after each invoice has been paid by your customer.

If you have construction invoices, click here. If you have medical invoices, click here.

To begin click here, or call us toll-free at 623.536.0896.

If you know a company or individual holding notes or any other income stream, but would prefer a lump sum of cash, click here. If we purchase their note, WE'LL PAY YOU a finder's fee!

Last Updated: October 17, 2004