Best Trucking Factoring Companies Locations
We Can Offer You What Others Can't
What is the receivables factoring
Versus The Actual Real
One of the most common mistakes clients and their advisors make regarding account receivable factoring company is in miscalculating the interest cost of their program. Having made the calculation error, the client mistakenly believes the cost to be double digits and has an emotional response as if being cheated, “Gee, that’s 18 percent a year. I’d never do that (you’re cheating me).” Feeling that he is being treated unfairly, the client dismisses a potentially valuable accounts receivable factoring finance option.
Clients need to have a clear understanding of what accounts receivables factoring is and then to understand why it’s used, what account receivable factor services are provided, and finally, what the real accounts receivable factoring companycost is. invoice factoring and account receivable factoring servicesThe basics of account receivables factoring are quite simple: The client gives the receivables factoring
company his accounts receivable. The receivable factoring company advances funds against that paper then remits the balance of the money, less fees, when the receivable is paid by the customer. Understanding some of the complexities of business receivable factoring , however, enables you to better analyze its value.
Compare account receivable factoring to the following real estate example. Assume that the client owns a strip mall, a dozen or so shops in a small shopping center, and goes to the account receivable financing bank for a $2,000,000 mortgage on the property. The bank looks at the account receivable finance financial statement of the mall and sets a mortgage based on the property’s receivable financing income stream, real estate location, and other considerations regarding the property’s general condition. Then the account receivable financing bank reviews the location’s information and finds that the tenant files are in poor order, credit checks on the tenants are mostly missing, and postings to the rent roster are late and frequently inaccurate.
What is receivables factoring ?
In its simplest form, business factoring invoice is the purchase and sale of a company’s accounts receivable (invoices) at an amount less than (a discount of) the face value. (Example: If the credit factoring discount is 3 percent, the invoice is being purchased for 97 cents on the dollar). This allows a company to convert its dormant assets — or invoices — into useable cash flow. It is not a loan.