Factoring For Distributors & Resellers
Accounts Receivable Factoring for Distributors
Accounts receivable factoring is a quick and easy process that can put cash in your hand within 24-48 hours.
- Banks can take weeks or months to make business loan decisions.
- Improve Cash Flow Without Incurring Debt
- You never worry about adding liabilities to your balance sheet.
- Invoice factoring is not a loan and you never have to make monthly loan payments along with payroll and other operational expenses.
What is Invoice Factoring
Factoring has many identities and is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. In a nutshell, invoice factoring is a way for businesses to fund cash flow by selling their invoices to a third party (a factor, or factoring company) at a discount.
Benefits of Factoring in the Distribution Industry
Your company can be free from a shortage of cash flow issues with our factoring services. Resellers and distributors experience 60 to 90 days to get paid on invoices for a product delivered. Distributors having to wait for customers to make payments on their invoices so that you can pay yours can take a toll. You can make timely payroll payments and pay suppliers and expenses without damaging your business credit, incurring late fees, or worrying that your employees will quit.
Capital for Business offers funding services that provide working capital and cash flow to a variety of service industries. Achieving and maintaining an effective and flexible cash flow is essential to the success of any business, particularly if you sell on trade credit terms. Often you might face unwelcome pressure on your cash flow through delayed payment by your customers. An Invoice factoring solution can help you fund your business by unlocking the power of your accounts receivable.
Advantages of Invoice Factoring
- It provides the cash flow finance and debt management solution that your business needs to succeed
- A flexible source of working capital driven directly by your trade credit invoices
- It’s responsive, cost-effective, and an alternative to a bank overdraft or loan
- It helps you turn today’s sales invoices into tomorrow’s cash flow by tapping into your accounts receivable asset
- It extends favorable terms to customers with confidence.
How It Works
- Factoring Agreement – The first step is to determine if your business meets preliminary qualifications to receive invoice financing/factoring. The Factor will conduct credit analysis using its database on the clients (account debtors) who owe you money. The Factoring Agreement will set an initial credit line for your business with all the clients you plan to finance.
- Submit Invoices for your initial advance – The Factor will fund your initial advance based on the invoices you submit, the advance funding will vary anywhere from 80-95% of the value of the factored invoice. The amount of your advance is initially established and depends on the size of your client list, transactions, industry, dilution, and recurring funding intervals.
- The Remaining Balance of the Invoices and Fee Deductions – The clients will be notified to pay The Factor on the financed invoices. Once your customer pays the invoices based on the terms, the remaining balance will be wired to you, minus the factoring fee. The fee will vary depending on the number of days the invoice remains outstanding. Factoring fees calculated on the invoice amount and can range between 0.69% – 4.9%.
- You submit an invoice for $1000.00 to The Factor on the product delivered or service performed.
- The Factor wires/Ach funds into your bank account at 90% = $900.00 deposit and holds in reserve 10% = $100.00.
- The client pays the invoice amount of $1000.00 to The Factor 40 days later, and The Factor closes out the transaction.
- Factor charges 3% fee = $30.00
- The Factor has $100.00 in reserve and deducts $30.00 from the reserve amount ($100.00 – $30.00 = $70.00)
- The Factor sends the remaining balance of $70.00 by wire/Ach to your bank account.
Is your distribution company experiencing cash flow shortages and needs funding now?
Capital for Business offers receivable finance for distributors and resellers experiencing cash flow shortages.
Our factoring finance program provides the utmost flexibility for enhancing your company’s capacity to grow without having to worry about pledging additional collateral. We leverage your receivable-based credit line solely on your customer’s financial strength, not your company’s.
Is your distribution or manufacturing plant growing faster than your operating capital?
At Capital for Business, our accounts receivable factoring service is a flexible source of funds for resellers and distributors. We simply utilize your accounts receivable as the collateral and advance funds against the face value of your invoices. The receivable credit line grows proportionately with your sales cycle and we can fund as little as $5,000 a month and up to $2.5 million for larger distribution companies.
Financing Receivables a Simple Process for Companies:
- Receivable financing rates at 0.69% – 1.59%
- Optional Structure Prime Rate +2% & Admin Fee
- No financials – No monthly minimums – No invoice minimums
- No facility fees – No audits – No up-front fees – No hidden fees
- Set up an account in 3 to 5 working days – 24 hr funding thereafter
- Receivable credit lines starting at $5,000 & up to $2.5 million
- Customer referrals upon your request
- We Make Same Day Decisions
Typical Documents Needed for Resellers and Distributors:
- A two-page application
- An accounts receivable aging report
- A customer list with credit limit request
- Copy of articles of Incorporation or DBA filing
- Purchase orders or rate confirmation agreements
- Invoices to factor
Most of our clients are either:
- Experiencing cash flow shortages due to a slow turnover in accounts receivable
- Fast-growing companies whose past earnings and sales histories will not justify traditional bank loan financing
- Start-up businesses with no financing base
- Principals with good or bad credit and cannot obtain traditional financing
- Have lost their line of credit due to covenant violations
- Need export receivable financing, credit protection, or purchase order financing
Factoring for Distributors Improves Cash Flow
The nature of the industry causes many distributors to operate as cash flow intensive companies. They continuously receive products from suppliers that are delivered to clients. Vendors must be paid on a regular basis as distributors attempt to collect on invoices from delivered products.
Rarely is cash flow where it needs to be to make sure this activity runs smoothly. It is not unusual to pay vendors within 10 days of receiving goods while waiting 30 days or more for customer payments.
Yet, the distributor’s entire business model is dependent on having customers that need the products. The discrepancy between the outflows and inflows of money can cause serious problems. For distributors familiar with these problems, this is where Capital for Business can help.
Taking advantage of one of our invoice factoring options is an affordable financial tool that keeps you in business. We are here to ease the stress of cash flow issues by sending you enough funds within a short period. Waiting weeks or months for customers to pay will no longer threaten the success of your distribution business. Your vendors receive payments on time and you can continue to satisfy customer needs.
Types of other Small Business Financing Available
SBA 7(a) loans from $30,000 – $350,000 from the Capital for Business network can be used for debt refinancing and working capital. Working capital includes operational expenses, marketing, hiring, etc. SBA loans can be used to fund new equipment purchases as well.
SBA Commercial Real Estate Loans from $500,000 – $5 million from the Capital for Business network can be used for the purchase or refinance of commercial real estate that is 51% owner-occupied.
Small Business Loan
A small business loan from our marketplace of 100+ alternative lenders will enable you to get the capital you need for your business growth. Our high approval rates mean that we say ‘Yes’ when banks say no. Our lending process which takes less than 5 minutes will not affect your fico score and we boast a 24-hour loan approval.
Working Capital Loan
Working Capital loans can help you take care of immediate needs in your business, whether that is a cash-flow shortfall or a new business opportunity. No collateral is required for our working capital loans or short-term funding, the required documentation is limited and perfect credit is not needed. Nearly every industry can get a working capital loan. Working capital loans are perfect for business owners who need short-term funding to grow. Working capital loans are simple, fast, and affordable and are designed to help with seasonal shortcomings with revenue or boost inventory.
Business Line of Credit
A business line of credit provided by Capital for Business is based on the revolving credit. That means you can use the funds over and over again. Having a business line of credit provides you with extra flexibility and peace of mind when it comes to injecting money into your daily operations. It helps you avoid downtime and make sure things are running smoothly
- Receive up to $250k with a business line of credit
- Business lines of credit rates as low as 6%
Business Loans for Bad Credit
we have bad credit business funding options for business owners with bad credit. Bad credit shouldn’t affect your ability to receive a small business loan so our loan advisors take look at your business revenue and potential, rather than your credit score to find alternative lending options for your business.
Merchant Cash Advance
A Merchant Cash Advance is an innovative alternative to a traditional small business loan. Capital for Business utilizes your expected future credit and debit card sales to be able to provide you with working capital so you can put your business plans into action. Instead of fixed daily payments, the repayment for an MCA is completely flexible.
- Receive up to $500k with a merchant cash advance
- Factor rates as low as 1.15
- Access to business funding in as little as 24 hours
Are you in the need of new business equipment but don’t have the necessary capital on hand to pay for it? Equipment financing done with Capital for Business is truly simple fast and affordable. We are a top-of-the-line marketplace alternative lender that can provide you with same-day funding to purchase any type of equipment that your business may need. Whether software, heavy construction equipment, vehicles, and much more. You will repay your equipment loan with low monthly payments and we keep the upfront cost minimal to something that your business can afford.
- Potential Section 179 tax deduction