Includes information on
- Client-rated Factoring and Structured Settlement Companies
- How to Avoid Scams.
- Trusted buyers of structured settlements
- Regular articles on Structured Settlement and Factoring.
FACTORING (Invoice or account receivables factoring)
Factoring is the process of purchasing commercial accounts receivable (invoices) from a business at a discount. Factoring is a quick way of financing which substantially improves a business' cash flow. Many businesses get into a cash shortage by extending credit to their customers for 30 days while having to immediately fund certain costs, particularly payroll. This problem only gets worse as sales grow. With factoring (invoice factoring), your invoices are used as collateral for a short-term loan which provides you immediate cash with which to meet these expenses. The most common type of factoring is Invoice factoring / accounts receivable factoring.
Invoice factoring allows you to leverage your large invoices to gain immediate access to cash. If you are a rapidly growing company you may have a large amount of money in account receivables that you can't tap from a traditional lender. In fact, fast growth creates an inordinate need for working capital. Through the process of invoice factoring (account receivables factoring) you may sell your account receivables to a funding source (a Factor). Typically the Factor will advance you 70% to 80% of your total amount and retain 20% to 30% in reserve. When the Factor collects on the receivables he will reimburse the reserve amount minus his fee which is typically 3% to 5%. You can see that after the first month you will be virtually running a C.O.D. business.
Advantages of Factoring (Invoice factoring):
- No arbitrary line of credit amount: With invoice factoring you borrow based on your sales activity so you are automatically set up to finance your growth.
- Increased sales due to credit extensions: Invoice factoring will definitely allow you to sell more to customers who are always willing to accept goods and services on credit.
- Maximizes the cash available to you: Factoring provides more cash than traditional bank lines of credit.
- Cash Flow is more predictable: In addition to speeding up your cash flow, factoring also makes it easier to manage your cash since your invoicing is more predictable than when customer payments will be received.
- Flexibility with your financing: Factor when you want, as much as you want, and for as long as you want. With 21st, there is no minimum factoring level or commitment to factor in the future.
- Improved credit evaluation: 21st can provide credit reports and expertise in helping to assess new customers or changes to existing ones.
Invoice factoring is for any business that accepts credit as a line of payments. With invoice factoring, you will have cash in your bank today that otherwise you would have in 90 days, or whatever time your credit period lasts. If your cash is tied up in unpaid invoices, your payroll is large, if your business is growing steadily but getting increasingly short of cash or if you are just starting in business, then invoice factoring is for you.
HOW IT WORKS
Invoice factoring is basically not a very complicated procedure, though some procedures may vary, depending on the factoring company. Your business will basically send all the invoices to the factoring company, along with supporting documentation. The factoring company will then review all the documents and upon approval, it will sent an advance money to the business, (usually 80% to 90% of the total worth of the invoices and once they receive all the money, they will advance the rest of the money to the business, usually less some commission. Factoring companies that provide invoice factoring services vary in terms of commissions and even the quality of service provided. CHOOSING A FACTORING COMPANY
You will want to choose a factoring company that truly specializes in the industry and one that offers the best rates and customer service. Every finance/factoring company will say they will factor your invoices, but many times after you have spent hours even days trying to qualify, you get turned down! Anexperienced factoring company like Sovereign Funding, has a proven track record in the industry adequate industry knowledge in handling and executing invoice factoring transactions. Their knowledge of the industry lowers their financial risk and therefore gives your business a better chance at being accepted. It is that type of factoring company that personally tailors its programs for each company's particular needs, and takes a PERSONAL interest in the success of your company. Finally, it is important to choose a factoring company that has the latest and most up to date technology to ease the need for "time-consuming hassles" to get an invoice funded.
How to avoid funding scams.
You also have to be careful not to be a victim of funding Scams that are prevalent on the internet. Most will steal your banking information and maybe cash eventually. A good way of identifying scam artists is that they don't give contact information on their sites for obvious reasons. Also most of them will reach you by email Spam (reputable companies never Spam). If you suspect any company or email, just do a Google search on the email or company name. If they are scammers, they have probably been exposed in some forums and a Google search can help you reveal that. Always go for a legitimate and established factoring company with clear contact information on their website and a 1-800 / 1-877 number for calls, you can call and get a feeling if they are legitimate or not.
Our recommended factoring company is Sovereign Funding. Apart from being a leader and specialist in factoring and structured settlements, it has a proven track record in the funding industry and good reviews from previous clients (according to a rare customer service reviews study on factoring and structured settlement companies).
STRUCTURED SETTLEMENTS
Structured Settlement: A Structured settlement is a financial package permitting a settlement to be paid in regular installments either for a fixed period or for the lifetime of the claimant. The structured settlement payment is usually made through purchase of a annuity from a Life Insurance Company. Structured settlements are used to resolve personal injury claims. According to the National Structured Settlement Trade Association, for nearly 20 years, the federal government has recognized and encouraged the use of structured settlements in personal injury cases.Structured settlements are rigid and inflexible plans. For example, if someone gets injured and hires a lawyer who wins a personal injury claim. If the agreement reached is to make payments over a long time, and yet the injured person needs a more flexible plan to address a cash shortage due to, for example, the medical expenses, the structured payment agreements are too rigid to provide a satisfying plan. This is where structured settlement buyers like Sovereign Funding come in.
You can sell your structured settlement annuity to a Structured settlement company. They will buy the structured settlement and give you a lump some so that you can take care of the immediate cash shortage with ease. You will therefore end up getting cash for your structured structured settlement that you would have otherwise have to wait for a long time to receive in installments.
As mentioned above, we have had some feedback on some factoring and structured payment companies and on top of client reviews list is Sovereign Funding: Buyers of structured settlements and other funding services. Their services span factoring, cash for structured payments, buying structured payments, mortgage funding etc. Everyday, hundreds of people who win settlements from injury claims or insurance claims find themselves in a position where they are compensated but cannot access the funds immediately (inflexible structured settlement plan). This is where a structured settlement company that can buy structured settlements comes in. You can find more reading on factoring and structured settlements in the series of articles in our blogspots.
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