Factoring Accounts Receivable Can Improve Cash Flow

1. Factoring Accounts Receivable Can Improve Cash Flow

2. Improving Cash Flow would Benefit Your Business You Performed Services… You Delivered Goods… Now, You are Waiting to receive the payment on outstanding invoices

3. Bank Loans Have Become Scarcer And Smaller • Recession has made borrowing difficult • Even if Your Business qualifies for a Bank loan: • Credit Standards for business loans have tightened • The Shift is from Cash is lending to Asset Based lending • Asset Based loans are secured against specific collateral. • Covenant: You must maintain positive Cash Flow. • Covenant: You cannot exceed a total leverage ratio. •  Covenant: You must maintain a minimum net worth.

4. Instead of Borrowing: Use Invoice or Account Receivable List Of Business Assets : • Real Estate • Equipment • Inventory • Furnishing and Fixtures • Accounts Receivables • Intellectual Property • Stock in Other Property

5. Collection Time Determines the Factor’sFee , With the Balance Remitted to the Company Income Factor’s Fee  Company Income Factor’s Fee • Once The Factor Purchase the invoices, • the factor collects from the customer. • The amount of time it takes for Invoice • the customer to pay, determines the • Factor’s fee (typically, 3% if Broker’s • Fee collection in less than 30 days, • plus 1% for each extra 10 days) • CFA’s Broker’s fee is in addition to the • Factor’s Fee. Your Company’s Invoice or Account Receivable are sold in exchange for : •   Advance Rate (75%-95% of the invoice. • Less the Factor’s Fee and the Broker’s Fee • The Reserve Release (Paid to you after the factor collects)

6. You Maintain Control in the Factoring Process • You select which Invoice you want to sell • On an invoice-by-invoice basis • You Control Factoring Cost’s • Internet-based factoring systems, basis. allow you 24/7 online account access. • Advances and Reserve Release done via wire transfer. • Factors will also perform credit on new or existing customers