Accounts receivable funding is a widely used
financial
solution for all types of businesses that extend credit terms to their
customers. Here are some common questions our customers ask.
1. How is accounts receivable funding different than a loan from a
bank? When making an accounts receivable funding decision, we will
focus on the creditworthiness of your customers while banks will focus
on your company’s financial history and cash flow. Accounts receivable
funding is not a loan, therefore provides you with less debt on your
company’s balance sheet. we can make a quick funding decision, while
banks may take weeks—even months—to approve a loan.
2. Will my company be eligible for accounts receivable funding if it
has a bank loan or line of credit? If a bank has a lien on your
company’s accounts receivable, you should let us know right away. We
will ask the bank to subordinate that lien. Some banks will accommodate
the request and others may decline depending on your circumstances. Our
number one referrals come from loan officers willing to help out the
client in cash flow needs. They are very familiar with this kind of
interim financing. The other alternative is to pay off the loan if there
is plenty of receivables to leverage the buy out.
3. My company owes back taxes. Can I still apply for accounts
receivable funding? Tax problems are handled on a case-by-case
basis. Please let us know immediately so that we can discuss a lien
subordination with the tax entity or request a payoff amount. We can use
the initial funding to payoff the tax entity if there is enough
leverage.
4. If my company is considering bankruptcy, is accounts receivable
funding still an option? Please note that Chapter 11 is the only
form of bankruptcy that we will consider.
5. What information will you need from my company to begin the
accounts receivable funding process? A short application, your
company’s most recent accounts receivable and accounts payable aging
reports, Articles of Incorporation or d/b/a/ filing, a master customer
list and a sample invoice.
6. Which customers would be good candidates for accounts receivable
funding? Usually 80% of your business comes from 20% of your
customers and these would be the most likely to factor, however, we will
factor 100% of your customer base so long as they are credit worthy. In
order to approve your customer base, we will need their names,
addresses, phone numbers and the amounts of credit desired for each
client. This will save you time when submitting invoices to us.
7. Can you purchase only a portion of my company’s invoices or one
customer? Yes, so long as it is not a one time deal.
8. How long does it take to receive the first funding? The
initial funding takes between 3-10 business days after we receive your
signed agreement. If you wish, you can send some invoices to be funded
with the signed contract in order to expedite your funding. After the
initial funding, your company can receive funds within 24 hours after
invoice verification.
9. How much of my company’s accounts receivable can be funded? We
can fund up to 100 percent of your company’s creditworthy accounts
receivable and depending on the industry, we may fund up to 92% advance.
10. What should I do if my customer mistakenly sends the payment to
my company? The answer to this question will apply to any factor you
deal with. This is very common especially with the first initial
funding. If this occurs, the check must be sent to us immediately. Your
company should never deposit invoice checks that were already purchased
by a factor. Your customer will be notified to pay us directly in the
future.
11. How can I be certain that your company will treat my customers
well? The last thing we want is for you to lose a customer. We are
not a collection agency. We will never harass your customers for money.
Maintaining your customers’ goodwill and confidence are of utmost
importance to us!
12. What should I tell my customer when they find out I am financing
my receivables? Should an account debtor (customer of our
client) who is unfamiliar with factoring question the notice of
assignment and ask what is going on, the business owner only needs
to tell them they have chosen to use a company to manage and finance
their accounts receivable.
1st Commercial Credit is a
factoring company that provides receivable financing for all major industries, We are
always adding industries to our portfolio.
[
[
[