An invoice discounter/factor specializes in the purchase of invoices for cash from its clients who, in turn, have under 90-day commercial receivables, using those receivables as its collateral.

After you complete our application, we check credit, perform legal searches and register securities, assemble the legal documents and obtain your customers' invoices with confirmed proof of delivery or completion of services.

Banks often have restrictive lending requirements that prohibit them from making certain loans, especially to small growth businesses. Factoring companies are not in the lending business, and the decision to purchase invoices is influenced by the quality of the customer base and the performance of customers' companies—not the clients' qualifications. Due to this difference we can extend financing when banks cannot.

Just because you haven’t been exposed to this financial service doesn’t mean that it doesn’t exist. Factoring has been a powerful financial tool for centuries, but until recently only very large companies could qualify for factoring. Now small to medium size companies could qualify and receive the benefits of this financial service.

We typically advance 75% of the value of the invoice. After the first month, you are virtually COD, so the percent of advance isn’t really an issue. In the second month you receive the current advance and the reserves from last months’ paid invoices.

Examine your real purpose in factoring. Is it to access funds to grow and enhance your business, or are you trying to transfer the risk of doing business with your customers to a third party? Non-recourse factoring contracts, when carefully analyzed, only eliminate the risk of bankruptcy of the customer. They don’t insulate the client from the risk of disputes with the customer. The most common cause of refusal to pay an invoice is a dispute over quality, delivery, or specification. None of these risks are eliminated or even reduced by a non-recourse contract, all they do is increase the cost of your capital. A non-recourse factor must endure the risk of financial failure of a customer, so it stands to reason that customers will be placed under a "credit microscope" and the risk will be rejected. If the client is factoring to access additional funds, a non-recourse contract may be contrary to the client’s best interests, because it may actually limit access to funds.

You may be concerned that your customers will think that you are in financial trouble and that they might look for alternative sources of your product or service. These are common, yet unfounded concerns. The fact that you and your company qualify for this service actually makes a powerful and positive statement about the financial strength of your company and the factor’s confidence in your managerial talents. Most people would agree that you must have money or assets in order to get money. If your neighbour or business associate received a multi-million dollar credit line from a bank, what would you think? Obviously, you would not think that he was needy, but you would be impressed with his credit-worthiness.

When we verify invoices with your customers, we tell them that because of the rapid growth you are experiencing, you have received an unlimited line of credit based upon your accounts receivable and that the verification is part of receivables management that accompanies that credit line. Most communications with the customer is at the level of the payables clerk, who has no concern, and only rarely are officers or owners involved.

Compared to what, missed profit? A bank that isn’t willing to lend you the money? Factoring will typically give you access to more capital than other sources of financing. The question should not be, isn't factoring expensive, but rather can my company generate more profit with access to additional capital.