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Bad credit score puts the entire onus on the person to deal with greater financial challenges. As a credit repair firm Arizona, The Makela Group understands its customeru2019s situation and devises excellent plans for credit repair and management. We are one of the best credit repair firms Arizona to facilitate business credit lines and funds as needed by a business or small startup. You can call us at 602-908-4351.
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Factoring, or receivable financing is the sale of your invoices or accounts receivable to a third party. It is very dominant in certain industries, i.e. trucking and transportation, staffing, etc. What differentiates factoring is really the three points we'll discuss - who is offering it to you, what it costs, and how does it work. You need to align yourself with a party that is most suited to your type of business, the size of your receivables portfolio and the ability to deal on a one on one basis on any issues that come up. Your best partner will be a firm who as direct representation in your geographical area. Is factoring expensive? Receivable financing can appear to be expensive, and unfortunately most borrowers are always focused on rate. Factoring usually has a discount rate of between 1-3% per month. We use the term discount rate because the industry itself doesn't view the rate as an interest rate; it views it as essentially a reduction in your overall gross margin.
Let's use a quick, clear example. Let's say you have an invoice for $100,000.00. Factoring allows you to get approx 90% of the funds on that invoice the day you generate the invoice. (The balance, 10%, is paid to you when your customer pays,) and out of that holdback comes, say a 2% discount fee to the factor firm) the factor industry view that 2% as a commission for financing your invoice. If your customer pays in 30 days, you would have paid 2% per month, that's 24% per annum that is expensive. Now compare this with the accepting of credit cards where the discount rate is typically 2.5% - 3% or even more! By factoring and getting immediate cash, you may be able to purchase inventory at a better price for cash, or alternatively, you can take the many 2% net ten day discounts many suppliers offer. If that was the case on all your business we can make the statement that you are recovering 100% of your financing costs via this strategy, plus you have unlimited working capital. Summary of Factoring Benefits: • Meet increasing sales demand • Grow your business • Avoid "collection" hassles • Buy in bulk and receive discounts • Meet payroll • Avoid payroll and estimated tax delinquencies • No personal guarantee required.
