Invoice factoring services offer a financing solution by which a business can raise money from selling invoices to a factoring company at a discount. Factoring offers a simple financing solution that helps companies release cash from their pending invoices. Factoring allows businesses in Wisconsin to access the funds against what is often their most valuable asset – their debtor book. This financial solution is available to clients of all sizes, including startups, small and medium-sized companies, and larger corporations. This financing method can benefit business owners who want to build working capital to grow without the burden of traditional lending programs such as conventional bank loans.
Factoring is a type of AR financing designed for businesses that invoice their customers and receive payment on extended terms that can range from a few weeks or even months in some cases. A factoring company in Wisconsin lends against your customer invoices, enabling you to receive most of the invoice value immediately rather than waiting a long time to get paid. The amount of funding available will typically be stated as a percentage of your outstanding invoice but may be constrained by specific terms and other aspects.
Typically, businesses using factoring will have the payments from customers go into a bank account that the factoring company controls, so your customers will know that you are using factoring. Some factoring companies give you the option to run credit and background checks to ensure that your customers are creditworthy and can be trusted to minimize your exposure to bad debt.
The two types of factoring are called "recourse" and "non-recourse factoring." With a recourse type of agreement, you would have to absorb the cost of the unpaid invoice if your customers do not pay it. On the other hand, with a non-recourse agreement, the lender would absorb the cost, leaving your business cash flow unaffected. Some lenders will often call this type of factoring 'bad debt protection' because businesses using it are protected from the issue of non-payment. However, as expected, this will make the factoring service more expensive because the lender accepts the maximum level of risk.
Choosing between recourse and non-recourse will depend on your current customers' relationships and how likely you think a non-payment will happen. Of course, factoring includes credit control to help business owners minimize this possibility. With factoring, the costs are calculated a bit differently compared to business loans. They depend primarily on different things, including the number of invoices that are factored in and the type of industry, to mention a few. 1st Commercial Credit offers flexible and accessible factoring rates to accommodate your business' needs.
Companies in Wisconsin are aware of the many issues created when dealing with slow-paying customers and extended payment terms. Many businesses often face disparities between the time completing the work and the time it takes for customers to pay for it. Regardless of industry, the gap between work and payment can lead to several financial issues and affect business cash flow. While it is more common for some sectors to extend longer credit terms to customers than others, the businesses that offer them will usually face some significant problems while awaiting payments to come in. Some companies might have strong cash reserves to deal with this situation, but others will struggle to fulfill other financial responsibilities while awaiting payment. Bills will begin to accumulate, and payroll is to be covered each week. With that said, business owners can improve their cash flow and get access to that cash sooner with 1st Commercial Credit's financial solutions without taking on additional debt.
Manufacturing companies in Wisconsin typically face many different cash deficiency problems while waiting for customer payments that can sometimes take several weeks to even months. This is a common situation that many business owners have to deal with, but it shouldn't restrict growth. Factoring companies offer manufacturing financing solutions to ensure businesses can continue growing and investing in the different areas to achieve success.
1st Commercial Credit can provide instant cash without adding new debt to your balance sheet with manufacturing business loans. With accounts, receivable factoring businesses in Wisconsin can receive up to 97% of the total value of their invoices within 24 hours after approval. Additionally, there are no limitations or restrictions on using these funds, making this financial alternative the best and most effective solution for businesses with cash flow shortages.
A traditional bank can't offer all of these perks because they have a strict list of requirements a company must fulfill before being approved for a loan. On the other hand, your company can immediately begin enjoying the benefits of manufacturing factoring and not be forced to wait 30 to 90 days for payments. Instead, factoring manufacturing firms is a business-friendly process. You can email or fax invoice copies, and the factor will deposit funds directly into your account. Factoring receivables allows business owners to use the increased working capital to cover everyday expenses and make substantial investments to grow their manufacturing company in Wisconsin. There are no limits or restrictions with this financing alternative. The cash received can be applied wherever needed, and your funding potential increases with your sales. In addition, future funding is even easier and faster once an account is set up! The financing relationship with a factoring company brings more benefits than just immediate access to cash, even though that is already substantial.
Some of these additional advantages include:
Businesses working with a company that factors can use the working capital to update inventory, purchase new materials, fund payroll, cover unexpected expenses, and invest in expansion. There are no restrictions on how you apply the funds you receive via factoring. 1st Commercial Credit works with a variety of manufacturing companies and can assess your specific situation today. Even successful and well-established manufacturing companies can experience difficulties when covering their general expenses, especially if client payments take a very long time to come in. If you are in a similar situation, factoring might be the best solution. The factoring process for the manufacturing industry is smooth and straightforward with 1st Commercial Credit.
The process is as follows:
Creating an invoice financing relationship with accounts receivable funding companies adds way more benefits to your manufacturing company than just getting immediate cash. 1st Commercial Credit offers different financing solutions to the manufacturing industry in Wisconsin. If your company would benefit from our financing programs, do not hesitate to reach out so we can evaluate your company's situation and provide you with funding solutions today!
A factoring company (or accounts receivable factoring) converts invoices sold on credit terms to immediate working capital at a discount. It has become a simple, fast and easy way to access business cash flow. In comparison with a traditional bank loan, a company that factors receivables has a quicker approval process.
1st Commercial Credit is a factoring receivables company that specializes in evaluating accounts receivable and can make a prompt approval decision. The documentation requirements are not as lengthy, and the main requirement is that an applicant has invoices for work or orders that have already been satisfied. It also helps to have creditworthy customers. As long as a business has been in operation, meets revenue requirements, and is free of liens or legal issues, approval is likelier.
Some quick facts about the agriculture sector are:
If your agribusiness is experiencing cash flow challenges and needs an immediate financial solution to continue running operations and making payroll each period, do not hesitate to contact 1st Commercial Credit. We have more than 18 years working with Wisconsin's produce and agriculture industry and can provide a fast financial solution.
A significant problem many temporary staffing firms in Wisconsin face is balancing the challenge of connecting and sending out qualified staff to customers while having to pay them on time week after week, even if the customers have not paid for the services. This common situation can threaten the survival of the agency and limit growth opportunities. Smaller and newer agencies are not always accepted by the bank when they ask for a working capital loan. Even if they could, such a loan would only add more debt to their books and probably take a long time to be approved.
Businesses in a similar situation can partner with a dedicated receivable financing company. 1st Commercial Credit offers the best staffing agency line of credit to solve the problem on a more permanent basis. Factoring companies specialize in purchasing unpaid invoices from staffing companies and advancing payment. This means that the staffing agency gets funding as soon as the invoice is created, allowing a predictable and reliable cash flow to pay operating expenses, bills, and payroll.
The financing process for receivables is simple and as follows:
1. The first step is for the lending company to determine if the staffing agency meets preliminary qualifications to receive invoice financing. The financing company will conduct credit analysis using its database on the staffing firm’s customers (account debtors) who owe the money. The factoring agreement will establish an initial credit line for the staffing agency with all the clients you plan to finance.
2. Once the staffing agency submits invoices, the funding will vary anywhere from 80 percent to 97% of the value of the invoice. The amount of the advance is initially established and depends on the size of the client list, industry, transactions, and recurring funding intervals. The remaining balance is held in reserve for later use.
3. The factoring fees are based on how long it takes the clients to pay the invoices. After the factoring fee is subtracted, the remaining balance (reserve) will be sent to the staffing agency. The fee will vary and depends mainly on the number of days the invoice remains outstanding and on the terms of the factoring agreement.
Many owners of temporary firms are not aware this type of financing exists, or if they know about it, they are not sure they can qualify for it after being turned down by banks. In reality, it does not matter if the firm’s credit rating is too weak as this is not something factoring companies look at. This is because receivable finance companies evaluate the credit of a temp agency’s clients, not the temp agency itself. The client, after all, is the one who will ultimately pay the loan. This credit approval service helps insulate temporary firms from the risks of taking on clients who have a history of unpaid invoices. Payroll funding for staffing agencies is an easier and faster alternative for business financing that will put your outstanding invoices to work so you can finally use the cash stuck in them.
Some owners also have the misconception and fear about high fees and unfavorable lending terms. This is a misperception because factoring fees never go higher than 3.5 percent of the total invoice. Most staffing firms will make a 20-25 %profit on every invoice; 3.5 % is a minor loss compared to the benefits obtained, including immediate cash flow that allows the staffing firm to stay comfortably in business. Additionally, solving cash flow problems makes it easier for the staffing company to grow. As previously mentioned, receivable financing companies add many other valuable services to the funding services, and many staffing firms should explore and take advantage of this financial solution.