1) Speed: Unlike most capital resources, the factoring relationship can
be set up within days, and once set up the funding of invoice can
happen between 24 to 48 hours.
2) Financial: Most of the funding decision is based on the credit of
the customer.
3) Credit limit: As long as the client is invoicing a credit-worthy
customer, factoring relationships can grow with the client so there
may not be limits to access of capital.
4) Discipline: Lack of discipline often causes companies to not pay
loans regularly down the line. With factoring, there's no lack of
discipline -- each time a customer pays the invoice, it retires the
mini-loan.
5) Equity: Factoring is considered an off-balance sheet form of
financing, which keeps any net term liability off the corporate
balance sheet, preserving the equity position in a positive manner.
6) Set up: The process of getting set up requires minimal paperwork and
no lengthy negotiations compared to banks and equity venture funding.
7) Cost: The cost of factoring invoices is relative to the short-term
nature of the transaction, not lasting more than 90 days -- more
than a bank, but less than a VC. Companies with thin profit margins
are not good candidates for factoring to grow their business.
8) Growth: Having access to capital improves the financial position of
a growing company. While factoring is a short term solution, it
ultimately leads them to conventional bank financing.
"Here's one typical example of how factoring works, and why it can be so
important to a company on the verge of doubling in size," said George
Shapiro, chief executive officer of The Interface Financial Group (IFG).
"This company has struggled to get a contract for a long time, which has
created stress on their finances. They finally get the contract and send
out the first invoice, but at the same time a dozen new hires need to be
put in place. With factoring, the next day access to capital tied up in the
invoice is available to the company, allowing them to hire people, make
payroll two weeks later, and do more business."
Invoice
factoring benefits businesses that do not get paid for 30 to 60 or 90
days by advancing up to 90 percent against invoices. IFG looks at the
creditworthiness of the client's customers and can fund within as little as
24 hours. There are basically three parts to a factoring transaction: 1)
Advance -- the percentage of the total amount of the invoice the company
has access to when they are funded, which is around 80 percent, and
depending on the industry, it can be 90 percent; 2) Reserve -- the
remaining funds from the invoice that are held back and released when the
customer pays the invoice; and 3) Discount fee -- the fee associated with
doing the transaction which gets deducted from the reserve. Based on how
long it takes to receive payment of the invoice, the fee can be from two to
five percent of the total value of the invoice.
The Interface Financial Group specializes in construction
factoring, and today IFG is finding that single invoice factoring is a
popular new tactic, allowing companies to factor one invoice at a time. The
company does not expect to buy 100 percent of a company's receivables, and
there are no minimum or maximum sales volume requirements.
IFG's recent private label factoring products include: Export Factoring, providing
factoring services for companies who export from the United States and
Canada; P.O. Funding to finance purchase orders when a company receives a
purchase order and needs to purchase supplies to fulfill the order; and
Inventory Financing, a solution promoting a company's growth by funding
them when they must expand and purchase inventory.
About The Interface Financial Group (www.ifgnetwork.com)
The Interface Financial Group (IFG) is North America's largest alternative
funding source for small business, providing short-term financial
resources, including invoice factoring (invoice discounting). The company serves clients in
more than 30 industries in the United States, Canada, Australia, and New
Zealand, and offers cross-border transaction facilities between the U.S.
and Canada. With more than 140 offices across North America and over 35
years of experience, IFG provides innovative invoice factoring solutions by
offering short-term working capital to growing businesses. Single invoice
factoring, or spot factoring, is an extremely fast way to turn receivables
into cash.
IFG was founded in 1972 to provide short-term working capital to help small
to medium sized businesses grow. The IFG organization operates on a local
level, providing clients with local knowledge and experience and business
expertise in numerous diverse areas in addition to accounts receivable
factoring, including accounting, finance, law, marketing and banking.
Contact Information: Media Contact: Kristin Gabriel MarCom New Media T: 323.650.2838 E: Headquarters: The Interface Financial Group, Inc. 7910 Woodmont Avenue, Suite 1430 Bethesda, MD 20154 T: Toll Free: USA -- 877.210.9748 T: Toll Free: Canada -- 877.340.6893