Although the terms "factoring" and "asset-based lending" sometimes can be confused and used interchangeably when looking into accounts receivable financing, there are significant differences you should be aware of when evaluating both of these alternative financing solutions. The biggest difference between factoring and asset-based lending is that a factoring company actually purchases your invoices at a discount. In contrast, asset based lenders allow you to retain ownership of your business. ABL financing enables you to maintain ownership of your invoices and simply borrow against them.
With factoring, the lending company owns your invoices, and they will contact your customers to obtain payment. If customers fail to make invoices payments in full by the time the terms come to an end, the factor has the right to put all efforts in collection to inquire about when payment will be made. In addition, factoring companies will often require that your customers make checks payable directly to them. Business owners who do not want their customers to find out of their financing relationship with a lender and want to retain full ownership of their invoices and be responsible for collections might opt for ABL's. On the other hand, if you would rather remove the burden of collections and prefer to delegate that to a third-party lender, then factoring might be better. 1st Commercial Credit provides excellent flexibility to all clients. Our clients can borrow as many funds as needed and as often as needed. This flexibility lets our clients borrow against older invoices, lowering the cost of borrowing.
Asset-based financing vs. factoring Meeting specific short-term cash needs means that small businesses will need access to working capital while using short-term assets as collateral for financing. Common types of asset-based financing include:
Factoring is simply the sale of a company's receivables which helps you generate cash sooner than if you waited and collected the money on your own. The factoring company that purchases your receivables takes ownership of the invoices and the responsibility of collecting them when they are due. If you've determined that factoring is the ideal solution for your businesses, it will offer many benefits, including:
Factoring agreements can be pretty flexible, and you should always try to negotiate for the best terms possible before selecting your factoring partner. Whatever financial solution you end up choosing for your business, 1st Commercial Credit can help.
1st Commercial Credit offers various solutions for businesses looking for alternative financing. Our highly competitive financing rates can be customized to fulfill your specific business needs and goals. In addition, we don't ask for any financials or upfront fees and have made it simple so that the entire application and funding process takes 3 to 5 days.
In addition, many complimentary services come with the cost of factoring, including collections, back-office admin, and credit checks on current and potential clients.
Offering payment terms of 30 to 90 or more days to clients is common for many industries and the main cause of cash flow problems for business owners in Des Moines. Not having sufficient funds will affect your ability to pay suppliers and employees and restrict your ability to make new opportunity investments. The good news is that our financial solutions will provide you with consistent and healthy cash flow. We offer various financial solutions to help small and midsize businesses in need of working capital to operate and grow.
What Makes 1st Commercial Credit The Best Lender in Des Moines, Iowa?
1st Commercial Credit can offer the following services and financial solutions:
Contact us to get more information about the offerings and approval processes. We can evaluate your business' situation without commitments in minutes and provide you with some solutions.
Companies in different industries can gain a significant edge over their competitors by using the most up-to-date equipment and tools. However, getting the necessary equipment requires substantial money that many business owners don’t always have. Instead of using cash to buy the equipment upfront, 1st Commercial offers two financing plan options—equipment leasing and equipment financing. The decision to use leasing or financing to get equipment will depend on a company’s specific needs and involves several considerations. These include the type of equipment the business needs, how often the equipment will be used, the maintenance and repair costs, and the resale value.
To figure out which one you should use to acquire the necessary equipment, it is a good idea to compare the two options to see which one fits your needs and possibilities better. As mentioned earlier, an equipment lease and an equipment financing agreement are the two significant ways to acquire equipment, but they are structured differently.
With our payroll services, a firm can expand its talent base by bringing employees to work without the financial burden of payroll. We can provide financial solutions to get instant cash flow to continue running and managing operations. Tech companies can sell their unpaid receivables to a factoring company in exchange for an advance which will provide a dependable and constant funding source.
This will allow businesses to grow and continue taking on contracts without worrying about cash flow shortages. Payroll funding will give you the confidence of knowing your company can make payroll each period and give you the financial freedom to focus on growing your agency, invest in marketing efforts, fulfill orders, and achieve the goals for the future.
Cash flow is vital for businesses in Des Moines, and they can now use their receivables to get the cash needed to pay employees. We can eliminate the burden and stress of waiting for those extended payment terms and risking losing your employees and passing on expanding and recruiting opportunities. Payroll financing allows tech companies to remain flexible and competitive in an industry that faces considerable uncertainty from time to time. Our services are also fully customized to your business needs, and we can also offer invoice factoring for software development companies in Des Moines.
Des Moines is a vibrant city with many restaurants and attractions. It is also a great place with many trails to jog, hike, or bike around. The Great Des Moines area is the fastest-growing metro in the Midwest for many reasons. It is a city full of culture, affordable cost of living, good weather, and a great family destination. Des Moines offers a clean, safe, inclusive, and fun destination that is ready to welcome visitors from all around the world.
Greater Des Moines serves as a commercial, government, cultural, and recreational hub for Iowa as the state capital. The region has one of the best business climates in the nation, with a nationally recognized, talented, and educated workforce. A competitive cost of living and excellent quality of life are the reasons why significant employers have found Des Moines to be an ideal location for them. Des Moines’ top key industries include: