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How To Select The Right Factoring Company

There are many variables besides just the “lowest” discount fee that will come into play when selecting the factoring company best suited to your company’s needs. This Article has the important things you should look for when picking a factoring company:
pick the right factoring company

You can find several key attributes you should search for before picking the right factoring company for your business. A reliable factoring company should have a high quality credit department, a professional collection staff, a long history, financial strength, and current systems for keeping their customers informed with real time information.

In contrast to a standard bank or perhaps a finance company, factoring companies have a day-in, day-out relationships with regards to their clients, so selecting the right factoring company boils down to who can you see your business aligned with?

Generally, the response for this question is most likely the factoring company with the lowest discount fee and quite often it is the factoring company that fits various other needs better than the comapany with the lowest fee. In the end, determining the overall cost can prove difficult, so you may want to consider additional critical variables. Heres points to consider in order to pick the most suitable factoring company for you:

Does the factoring company have a fully staffed credit department?
Any factoring company that has a good credit department, could be your choice if you’re searching for a factoring company which will help you make prudent credit limits for your customers. A factoring company which does not have a fully staffed credit department is likely to not approve ideal credit limits and because of this, may expose your company to incorrect levels of risk. However, a factoring company in which does not approve enough credit to have capacity for your needs might entirely restrain your companies capacity to grow.

Does the factoring company have a collection department?
You just might pick a factoring company with a fully-staffed collection department.Why? Because It might stun you to know that a large number of factoring companies don’t have a collection department. For anyone who is considering choosing a factoring company which takes their duty of collecting receivables seriously, the factoring company will assign your business with two contacts: an account representative + a collection specialist.

This is important because factoring companies WITHOUT a collection department are forced to assign the task of collections to one account representative.

Does the factoring company have a good track-record?
A factoring company in which has been in business greater than ten years likely comes with the expertise needed to supply an quality level of service. A factoring company that’s endured various business cycles demonstrates effectiveness. However If in doubt, ask the factoring company you’re talking to for bank references or information about their financial shape. Most of all, ask your factoring company for client testimonials if possible customers that are in your industry.

Does the factoring company have a specialist in your industry?
You most likely are searching for a factoring company that knows your industry. Industry specialists are extremely vital. If you happen to run a staffing company, you should seek out a factoring company with staffing specialists. For instance a staffing factoring company will be familiar with your regulations and payroll needs and provide unique services such as payroll checks, payroll deposits, payroll reporting, payroll software, invoicing and invoice mailing. since, a staffing factoring company will certainly have their own first hand experience in dealing with hundreds of other staffing companies. If a staffing factoring company already knows your customers, you will save money because you will not need to spend money on credit reports.

Is the factoring company the best size for your company?
Perhaps you may be interested in a large or small factoring company, based upon your philosophy. Your best bet could be a factoring company that is somewhere in between small enough to provide personalised service and the means to access top management, then again large enough to deliver financial stability, the capacity to accommodate your needs, as well as the skill to survive challenging economic times.

Continue reading How To Select The Right Factoring Company

What is Factoring?

By: Chris Lanchech
What is Factoring?

What is factoring is a good question, because most business owners can not define factoring. If you own a business selling goods or services on credit terms then odds are your business can benefit greatly from a finical tool called factoring.

Factoring is a method of selling your accounts receivable or invoices. Factoring companies advance your business 70-90% of your invoice amounts. When your customer pays the invoice in the future the factoring company pays you the remaining 10% minus a small factoring fee. This fee is typically 1.5% to 2.5% depending on industry and other variables.

Why is factoring a popular finical too for business owners?

good question, to answer this lets use a trucking company as an example. Generally a trucking company bills its customers on credit terms such as net 30. However the trucking company has weekly expenses like tires, tolls, gasoline and beef jerky. Okay maybe they don’t spend a lot of cash on beef jerky but you get the point.

Now the trucking company will turn to a factoring company for an advance on their invoices. For example a $10,000 invoice > factoring company advances 90% ($9,000) > the customer pays the invoices in 60 days > the factoring company sends the trucking company the remaining 10% minus a factoring fee 1.5% > The trucking company paid $150 ($10,000 x 1.5%) and got their cash without waiting.

This small factoring fee is well worth it for many businesses that sell on credit because they greatly benefit from having cash in their hands without waiting. Business owners also save money by having cash in hand faster without waiting to get paid. How?

They can pay their suppliers faster and take advantage of discounts, they have cash on hand to handle marketing and new projects ect.

To see the pro’s and con’s of factoring click here or visit neebocapital.com and check out the free ebook about the pros and cons of factoring.

Good Luck!

Factoring VS Bank Loans

Just about the most common statement I hear individuals make is that factoring is far more expensive than a loan from the bank. This comparison is like comparing apples & oranges but most business owners still believe it. The reason is because factoring is a financial tool that few business owners fully understand.

First, lets make it clear that when a company can qualify for sufficient financing from a traditional bank and that is the very best financial option for the business then factoring need not to be considered.

However if a company is unable to obtain adequate financing from a bank then factoring may be a better option for small businesses.

first- Factoring is not debt financing, you don’t receive money like you will from a traditional bank. A factoring company actually purchases the invoice from your business, therefore the invoice is an asset you’re selling. These invoices must be purchased at a discount so it should not be compared to an interest rate from a line of credit.

2nd- Turnaround time for authorization for funding from your traditional bank is often longer than 2 months with alot of unnecessary pain and paperwork. Your banker has to get approvals and the underwriting team has many hurdles for you to jump over in order to get funded. With factoring you can get an account and get funded in as fast as a week and then on future invoices you can receive funding in 24 hours. Plus if you acquire additional customers the factoring company will fund you for them in 24 hours.

third- A traditional bank generally needs to see a minimum of 2 years of financial for your business as well as requires you to have collateral together with your invoices EVEN a personal guarantee. On the other hand, A factoring company can provide funding to start-up companies so long as their customers are creditworthy and all that is required is the accounts receivable and many factoring companies don’t demand a personal guarantee.

fourth- A factoring company in addition offers even more services. As opposed to a traditional bank, a factoring company constantly monitors your accounts receivable and collections. They offer credit screening for potential new clients for your company and they provide up to date aging reports to help you in getting a better handle on your receivables aging. A factoring company is also constantly advancing new funds as well as collecting outstanding invoices and your credit facility continues to grow with your new accounts.

To sum it up the big issue is not if factoring is more costly than a bank loan, because it is obvious that the two cannot be compared. As a business owner you should consider advantages of factoring vs. a bank loan.

With factoring you never be worried about out-growing your credit line or quickly spend your loan and get into debt with the bank. With factoring you can get additional capital easily when needed so your credit line grows as your business grows.

Plus if you are unable to meet orders due to insufficient working capital, then factoring offers you the cash-flow needed to complete the order. If you find your business in this situation give us a call 1-888-382-3766 or visit us online by clicking here.

Factoring Websites Claim Unreal 1% rates?

A quick online search shows that you will find a number of factoring companies that offer what appears to be very cheap factoring rates. Based upon what you search online, you will find claims saying you can factor your invoices for only 1%. Sometimes, the rates are even lower. How can this be? And in some advertised websites, the rates appear to be cheaper than traditional bank financing.

Just how can factoring be cheaper compared to a conventional business loan that’s only reserved for prime customers with plenty of assets?

Let us explain this for you:

The key is to recognize how nearly all factoring rates work. Even though the rates might seem to be cheaper than bank financing, often they will not be.

Why?

Well first we need to evaluate how factoring fees are commonly evaluated. Factoring company’s commonly charge you a fee that will increase the longer that a invoice remains un-paid. This is sensible, the more time an invoice goes unpaid = the greater the cost.

Below are 2 popular techniques for determining factoring fees:

1. Ten Day Fee: This is certainly the most popular factoring fee structure. In this case, the factoring company prices a fee for a 10-day period. For instance, 1.00% for every 10 days the invoice remains unpaid, this fee adds up until the customers pay the invoice in full. The fee for the first 10 days is 1.00%. The fee for the second ten days is 2.00% and etc.

2. Daily fee: This is the most basic factoring fee model you are charged a daily fee for each day that the invoice is unpaid by the customer. An example of this would be a 0.30% fee per day. This equals about 1.00% for ten days and about 3.00% for every 30 days the invoice remains unpaid.

These illustrations have got one thing in common = the cost of factoring a invoice for ten days is 1.00%. Using this information, you could say factoring is provided at rates “as low as 1%” Definitely, just make sure your invoice are paid very quickly and in ten days or less.

in the event that you are evaluating factoring proposals, you should contemplate looking at the fee structure carefully to recognize what the total cost of factoring is going to be for you. The best way to find out – check with your factoring company for the cost of factoring invoices for thirty or sixty days. That will provide you with a good measure of the actual factoring fee cost.

If your business is experiencing cash flow issues and is in need of funding, give us a call 1-888-382-3766 or visit us online by clicking here

Small Business reduce costs by Factoring Invoices

You are in business to make money, and today the business environment is not getting better as fast as many small businesses would like, so many businesses are looking for ways to cut costs. Factoring is a strategy most US businesses do not consider, because it is widely misunderstood.

Instead small businesses look for obvious methods they know such as comparison shopping for the best deals on affordable insurance premiums, re-negotiating a lease or mortgage, however there are also some creative ways to save money such as invoice factoring.

You could start hiring short-term employees. An employee leasing company can help you save considerable amounts on benefits ,as the leasing company usually offers benefits to its workforce by itself. Employing temporary employees insures that you will be only paying for work as you need it.

Try shopping for business credit cards without any annual fee and also the lowest interest rates. Also steer clear of cash advances as credit card companies charge fees on the advance as well as a significant interest rate. And when making deposits in the bank, attempt to make them early in the day so that you start earning interest the same day.

If you can,Go paperless. it is possible to lower storage and printer costs along with better efficiency mainly because paperwork which are e-mailed get there immediately, as opposed to the time it will take to send something by way of USPS also preventing postage charges.

as opposed to buying office equipment, consider leasing it. If you not possess the equipment this will mean you are not responsible for many service or maintenance charges.

Think about factoring to help relieve cash flow complications quickly. Many business owners aren’t familiar with factoring receivables, the cash flow strategy wherein a small business sells its accounts receivable invoices to a factoring company like Neebo capital at a discount in exchange for immediate cash.

Factoring Invoices isn’t a bank loan. Loans are based on your assets and the ability to pay it back. But when factoring receivables, the funds available are based on your credit-worthy customers and are virtually unlimited. The more invoices you have, the higher your credit line is.

It is a wise idea to try alternative sources of funding like factoring receivables.

We define factoring for manufacturers, suppliers, and other businesses selling on credit.

Nowadays the business environment is changing, cahsflow and capital are not easy to come by for the manufacturing and supply sectors. Business opportunities are becoming more competitive and margins are shrinking. Your clients are also needing more time to payback on their invoices.

As business owners we understand this scenario, and here at Neebo Capital we can help. We can boost your cash flow by providing advances of cash against the value of the businesses outstanding invoices.

Afterward you issue new invoices, we send you up to 90% of the exact value of the invoice within just twenty-four hours. And as soon as we receive payment from your customer, the remaining capital are paid to you, minus a small services fee.

For manufactures, suppliers and other businesses looking to sell off of credit this process of factoring gives you easy access to a continuous source of cash linked to your sales. So as your business grows we deliver the funds…fast! This cash on hand will allow you to take advantage of discounts your suppliers may offer for paying early, the capital will allow you to increase growth projects, marketing, ect.

In addition to the cash that we provide, neebo capital can also help you save valuable management time. This is time spent better focusing on expanding your business.

We provide a accounts receivable managing program where we follow up and collect outstanding invoice repayments from your customers on your behalf, to ensure that you have more time to focus on generating new business. We prepare and send out statements, telephone all of your customers, collect payments for you and maintain professional and detailed accounts of your transactions. We give you twenty four hours on-line accessibility to your records, including scanned images of the checks that we receive, conversations, ect.

We have defined factoring, and our management service we offer as an optional. If you are interested in our factoring service, or any other need for capital then please visit neebocapital.com and discover how you can get funds to grow your business.

The Distinction between Bank Financing and Factoring Invoices?

You will find two special instances when a business owner commonly runs into cash flow problems. The first is when the business is just starting out, and the second is when the business starts growing rapidly. Unfortunately for the small business owners, banks are not looking to extend you credit in either situation. However, you can find factoring companies like Neebo Capital who will work with companies in both situations.

The heart of American business is the start-up, and everywhere you look today you see a unique start-up. This is what makes the economy grow, but start-ups experience an especially difficult time getting qualified for a bank loan.

First, a start-up doesn’t have any solid assets to secure loans. In reality, the company’s main asset is its accounts receivable, that sorry to say isn’t solid enough for a bank line because accounts receivable may disappear rapidly and with out warning. Banks look for assets which can be more tangible for example machinery, equipment, basically something actual physical that they can take hold of in the event the business defaults.

Alternatively factors provide cash depending on the stability of the company you invoice, your accounts receivable becomes your asset.

Failing Rates for New Businesses Are Too High

The second situation that could prevent a new company from obtaining a business loan is that banks will not contemplate loaning to businesses who are in business for fewer than 3 years due to the fact of the high failure rate for new businesses.

Keep in mind, factoring companys (Neebo Capital) have a different approach for lending capital to new businesses plus they aren’t turned off if your company is just starting-up. Capital lenders should stress to entrepreneurs that factors such as Neebo Capital the credit-worthiness of their customers and the quality of their invoices.

Furthermore, factoring companies such as Neebo Capital investigate the credit-worthiness of their clients customers. For a start-up is is important to be aware that the businesses they sell goods to have a good credit history as a way to gain easier access to capital from factoring companies.

Expanding Companies Do not Have Enough Credit History

Another time when entrepreneurs end up short of funds during fast growth periods. Most of the time, a fast growing company visits a standard bank in search of a much larger loan than what last year’s earnings could justify because they intend to use the loan to double or triple last year’s revenues.

Banks as we mentioned above will not lend a credit lines to new growing businesses.The bank is looking for tangible assets in order to lend the capital.

Factoring companies, alternatively, lend to start-ups and growing businesses.

In summary, companies who are just starting out or have begun to expand quickly can be approved for factoring even when banks have previously turned them down because the lending criteria differs. If you find your business in this situation pick up the phone and speak to a finance represenative at Neebo Capital for Free.

Understanding Profit Margins & Factoring

There is a point to think about whenever your business is looking to factor invoices. You need to think about your profit margins.Whenever you have to pay interest on capital you raise from outside sources, like Neebo Capital factoring company, you have to first decide whether you can pay for the added expense.

It’s a good idea in any event to know precisely the amount of profit you gain from every single sale you are making. If it is a product or service driven business it ought to be fairly easy to do.

To do this: deduct the cost of the product in advance of sale from the sales price minus all the added costs; shipping and delivery, taxes, commission rates, business overhead etc. It is also a good idea to work with your accountants to acquire a fixed percentage of the sale that represents your “overhead costs” such as rent, utilities, office managing.

With a service oriented business it is somewhat different, but when you treat an per hour wage like a product you can get an idea of the expenses involved with your jobs. An additional benefit of dealing with this exercise is determining precisely what it is you do that is the most lucrative.

Clearly you want to focus on activities or goods that have by far the most profit potential for your business. When factoring your invoices with Neebo Capital, the discount rate for supplying cashflow to help you increase your business is going to be an added cost towards the net profit we are discussing here.

For example if your business is a high volume- low margin venture, factoring may not be suitable financing. So knowing what your profit margins are will permit you to make the right decision when thinking about using factoring invoices with Neebo Capital as a tool for growth.

Does Factoring Work For Your Business

Our Intern Manny asked me to write a blog explaining to you, business owners ‘how factoring can grow their business’ So I am doing just that. This article was created with you and Manny in mind.

To start I need to say the economic crisis of ’08 has impacted us all, in regards to cash flow payment terms have been getting longer. Customers that would once pay in thirty days are now demanding 45 days to pay.

Clients that once paid in forty five days are now demanding sixty – many even go so far as demanding seventy or eighty days to pay.

This creates a serious problem for a lot of smaller businesses since many are not able to manage to wait that long to get paid. And Because of this, many businesses are forced to turn away these clients, or turn away new opportunities to generate business. For many, this makes a bad situation more shocking.

As a business owner you need to understand you do have options to combat these problems. Neebo capital.com have over 40 different lending options and we lend anywhere from $5k to $10 million revolving. However in this situation your best option would be factoring invoices.

Factoring invoices speeds up your income through a factoring company like Neebo capital.com and reduces you having to wait until 90 days to get paid by customers. Our factoring company gives up to 90% your invoices upfront, and the remaining 10% when the invoice is paid, minus a small fee (typically around .59 – 1.5%). as soon as your customer pays the invoice we give toy the remaining 10%

To make this process work effectively, you approve the transaction with us neebo capital.com, the factoring company before hand, after which you make the sales to your customer.

As soon as you carry out the work, you can invoice your customer and hand over the invoice to us, the factoring company. This would provide you with the immediate advance while Neebo Capital.com holds the remaining 10% of the invoice until it is repaid. Ideally by using this process repeatedly you grow your business by taking on new clients that you could not have afforded previously.

Being approved for factoring is more or less easy – at least in comparison to other forms of business financing methods. Take the time to fill out our short for on Neebocapital.com for a instant quote. There is no obligation.

Neebo Capital.com Explains Factoring Invoices

Welcome to NeeBo Capital, this article was written to give you a better understanding of how factoring invoices works.

As you know business owners need cash. However how do you get money for your small company when banks are unwilling to offer your company any type of funding?Our team would like to introduce you to accounts receivable factoring,a proven approach of obtaining investment capital swiftly. That way, you will make the payments required to keep your business afloat while reducing your risk amounts.Factoring invoices involves selling yourcompany accounts receivable to a company such as NeeBo Capital in order to obtain instant cash flow. The factoring company pays you an advance, which is a percentage of the total invoice (typically 80-95%). Your clients re-pay the factor, and you receive the remaining, minus a small factoring fee. This is a time tested method to keep your company cash flow growing.If many of your invoices are not paid on time, use NeeBo Capital as your factor. Your business depends on money to run, and factoring is a way to avoid waiting Thirty to 60 days for invoices to be paid. Factoring companys such as NeeBo Capital look at your customer’s credit history and offer you an advance and a fee.

Something to remember is the fact you do not have to factor all your invoices. You should not look to factor clients who usually pay rapidly and dependably. The loss of money from the factoring fee would be greater than the immediate benefits. By studying your invoices and choosing carefully which ones to factor you will increase your profits. You do not have to take the very first rate that a factor company offers.

In the event you do not feel like you are receiving a bargain, check if the factoring company can offer a reduce rate over time or even determine if you could get a greater advance at the start while the factor works with your customers. Most factor companies give lower fees to companies that use their services often. This benefits the factor in addition to your business by generating a partnership.So do not hesitate, start factoring your invoices with neebo capital.com today!