Loan Factoring

Factoring of receivables is an arrangement whereby a company sells its accounts receivables to another company (banks and other institutions) that specializes in buying them and obtains the necessary financial accommodation. It is the most popular method of short-term financing in the US. Factoring offers the following advantages: relief to manufacturers and sellers from the bother of collection of book debts, saving in time and man-power required for debt collection, and last but not the least, adequate and better source of financing.

The factoring institutions render the following functions: Credit recording- that involves maintenance of debtor?s ledgers, collection schedules etc. Secondly, there is Credit administration that includes the collection of debts. Thirdly, there is credit financing, whereby the factor advances money against receivables. Finally, there is finance and business information wherein advices are given to customers on current trends and challenges.

Commercial paper is an important money market instrument, which is in the form of unsecured promissory notes issued by firms to raise short-term funds. Certain conditions are to be satisfied before the issue of commercial paper. Permission should also be obtained from the credit rating agencies. Commercial papers are issued for a period ranging from 3 months to 6 months. Commercial paper offers alternative source of raising short-term finance, helpful in times of tight bank credit and is a cheaper source of finance.

Term loans are those loans that are extended for a specific period ranging from 1 to 15 years. Medium term loans are extended for a period of 5 years and long-term loans are granted for a period of 15 years. Term loans are granted for establishment, renovation, expansion and modernization of industrial units as well as meeting the requirements of core working capital and for repayment of bonds and preference shares. Term loans are usually secured. They have either a fixed or a floating charge against the assets of the company. They are granted on the basis of a formal agreement, which contains the terms, and a condition of providing loans.

Factoring provides detailed information on factoring, credit card factoring, loan factoring, invoice factoring and more. Factoring is affliated with Invoice Factoring Discounting.

Receibales Factoring Financing - How to Self Finance Growth

Do you own a company that is growing quickly? If your company were a car, do you feel like you are pressing on the accelerator while at the same time stepping on the brake? Or worse, that your growth is stuck in neutral?

Slow cash flow is the biggest challenge to company growth. And business owners, like you, know that the biggest cash flow problem is having to wait up to 90 days to get paid by your commercial and government customers.

Going to the bank for a business loan won't help much, unless your company has a great past history. This is because banks give business loans based on past performance. What you need is a financing product that can finance your company based on its future potential. And who better to evaluate your future potential than yourself? This is where receivables factoring can help you. This is because receivables factoring is self-financing.

Receivables factoring, also known as invoice factoring, works by eliminating the 30 to 60 days it takes for commercial clients to pay you. It enables you to get a substantial portion of the money owed to you within a day or two of invoicing, providing you with funds to pay rent, meet payroll and more importantly - expand your business.

Imagine if you could get paid consistently, just two days after invoicing. How fast could your business grow? And without debt. This is how receivables factoring works:

1. You invoice your customers as you always do
2. You send a copy of your invoice to the receivables factoring company for financing
3. The factoring company advances you up to 80% of your invoice (20% is not advanced to cover potential disputes, etc.)
4. You get your money right away. The factoring company waits to get paid by your customer
5. Once your customer pays, the factoring company rebates you the 20% reserve, less a small fee

Factoring can be a very cost effective way of financing your business. The factoring fee is based on three factors:

1. The credit quality of your customer, 2. Your monthly volume and, 3. How long it takes customers to pay your invoices.

As a rule of thumb, monthly costs can go from 1.5% to 6% per month depending on these criteria. If you own a company that has a lot of capital tied in slow paying receivables and if you need financing right away, you should consider factoring your invoices.

About Commercial Capital LLC We can provide you with a no obligation factoring, invoice factoring or receivables factoring quote. For more information, please call Marco Terry at (866) 730 1922

Business Finance Expert Series: "The History of Factoring"

In conventional times factoring ( http://www.hjventures.com/factoring/factoring-glossary.html ) is one of the most sought- after method to improve the cash flow ( http://www.hjventures.com/factoring/cash-flow.html ) of a company. When a firm decides to its account receivables to a financial institution then it is termed as factoring. The factor then bears the credit risk for the accounts and finally receives the sum from the customers. It is among one of the most effective and efficient form of financing used these days. Factoring has been in existence since the beginning of trade and commerce. It can be traced back to the period of a Mesopotamian king Hammurabi. However, an extensive use of the concept began in American colonies before the revolution started. During those times raw materials like timber, fur and cotton were shipped from the colonies and before they reached the destination merchant bankers in London and other parts of Europe used to advance funds for the raw material. The practice was very beneficial to the colonists, as they didn't have to wait for the money to begin their harvesting again. Basic work of factors of colonial times is similar to factors of conventional times. They have the same job of making advances against the account receivables ( http://www.hjventures.com/factoring/accounts-receivable-financing.html ) in order to help them in continuing with their job even before they are paid for their sale. With the Industrial Revolution the concept of factoring got narrowed down to credit. In the 60's and 70's with an escalation of interest rates there was a surge in private factors. The trend strengthened in 80's with further increase in interest rates and changes in the banking industry. With various expenses and inflexible rules involved with banking, factoring is a safe and easy method for financial expansion and growth. Working capital arranged through factoring is an easy means to cover purchasing, operating and other pay roll costs and provides the much-needed freedom from varied book keeping functions like credits and collections. All these attributes have made 'factoring' a buzzword in the financing market. Learn more about http://www.hjventures.com/factoring/factoring-glossary.html

Howard Schwartz is a partner in several business strategy groups, including HJ Ventures International, Inc. Howard has worked with hundreds of entrepreneurs worldwide with a focus on writing Business Plans for companies interested in raising capital from Venture Funds and Angel Investors. Howard's business plans have secured several million dollars in funding. For more information: http://www.hjventures.com/factoring/factoring-glossary.html

Factoring Financial Services - The Basics

There are several aspects of an existing business that are taken into consideration when getting approved for factoring financial services. The information that is required from any factoring financial servicing company will revolve around average invoice size. This is a huge contributing factor as well as whether the invoices are domestic or international. This means that the company seeking factoring services sells their service or goods outside the boundaries of the home country. The payment terms that were implemented for the invoices will also be considered in assessing the risk factor. The final aspect that any factoring financial services company will consider is the credit worthiness of the clientele base. All of these points together will give the company the opportunity to assess the risk associated with financing the invoices for any existing business.

There are basically two different types applications that are applied by factoring services companies. These are called the discount method and the prime plus method. Many companies use both of these methods of determining the cost that is charged to the client. Each financial situation is unique and most factoring financial services companies accommodate each business client according to their specific situation. With that said, in terms of very general speak, the prime plus method is usually the choice that produces lower rates than the discount method. This is an incredibly important step when finding a company that offers factoring services because many have hidden fees that are not mentioned initially. Find out exactly how each factoring financial services company regulates their factoring fees so there are no surprise fees added on at a later date.

To effectively understand the different methods used by factoring services companies, it is best to individually research each one. Let's start with the prime plus method to determine factoring financial services fees. The prime plus method has only two fees within its structure. The first part of the fee schedule is a one-time fee that is applied to every invoice. This is generally called the factoring fee. The factoring fees are assessed depending upon the gross amount of the invoice and applied accordingly. The second part of the prime plus method is the interest charge on the financial advance that the factoring services firm is providing. The day that the finances are made available to the business is the day that the interest begins. The interest rate is calculated by a pre-determined amount by the firm and the client before any financial advances are made.

The discount method that is applied to invoices by the factoring financial services firm's is based on a percentage per number of days. For example, if the discount method were 3% for the first 30 days, it would be calculated accordingly. It isn't hard to ascertain that the prime plus method is likely the better choice for any potential factoring services customer.

Troy Degarnham is the author and webmaster of http://www.accounts-receivable-financing.info an informative website about Invoice Factoring.

Extensive help and tips on factoring companies, assets, small business, medical factoring, non recourse and other factoring financial services.

Invoice Factoring Discounting

Invoice discounting is similar to invoice factoring, the difference being that the sales ledger management and the factoring company does not take up the collection responsibility. Invoice Discounting is good for businesses that are established with sufficient staff and infrastructure to keep accounts. The option is there to disclose or not disclose the service to the customer. Invoice discounting therefore allows more confidentiality than invoice factoring.

Invoice discounting, like invoice factoring assures the working capital necessary in times of need, and acts as an ideal debt management solution for a business. In fact, for flourishing businesses invoice discounting is a smart option for ensuring a continuous cash flow needed as capital. Invoice discounting extends a cash advance up to 90 % of the value of outstanding invoices, usually within 24 hours. Invoice discounting affords asset based lending as well. Invoice discounting and factoring carry charges such as administration or service charge for services offered and interest charge for the cash advanced.

Another advantage of invoice factoring discounting is the credit insurance policy assured- this gives protection against bad debts. There is the option to choose recourse or non-recourse facility. Both with invoice factoring and discounting, funds are available proportionate to the sales. The only assurance that the factoring discounting company needs is regarding the soundness and reliability of a business.

Invoice factoring discounting facility can be availed online also, which nullifies the numerous phone calls or fax and mail requirements. Invoice factoring discounting services might demand a notification period, in case one wants to terminate the business. For invoice discounting the fees charged are lesser than invoice factoring because here only finance is offered, because the business takes care of the sales ledger details and other official work.

Invoice Factoring provides detailed information on Invoice Factoring, Invoice Factoring Companies, Invoice Factoring Discounting, Invoice Factoring Rates and more. Invoice Factoring is affiliated with Loan Factoring.

Invoice Factoring Companies

Invoice factoring companies are companies that fully manage a business’s sales ledger, and ensure collection of all the debts due. Invoice factoring companies buy invoices or receivables from a business and advances 80 to 90 percent of the invoice amount. The remaining amount minus the charges will be paid when the customer clears the debt. The invoice factoring company takes the responsibility of informing the customer about the service. The seller receives the amount within 24 hours in most cases.

Invoice factoring companies are advantageous to businesses in that they provide the working capital needed when the clients fail to pay on time. They demand no collaterals and are therefore hassle free.

Invoice factoring companies gain from the service charge and the interest charge for the cash advanced to the business. The service charge is usually a certain percentage of the sales factored and the service charge is calculated usually depending on the annual turnover of the company, the number of invoices and the number of customers. The interest charges are along the lines of normal secured bank overdraft rates. Some invoice factoring companies provide bad debt protection whereas some do not. While this is termed non-recourse factoring, recourse factoring is the policy when the bad debts remain with the business.

Invoice factoring companies are a large group, existing as units within many commercial banks, as sections of large financial institutions, as companies, and as services offered by individuals. When choosing a factoring company, extreme care is to be taken regarding its terms and conditions, reputation, service, bad debt protection, service and interest charges. It is also best to verify whether the company chosen provides Internet access to one’s account so that the sales ledger and customer details can be constantly monitored. It is also crucial to ensure that they promote a good customer relationship.

Invoice Factoring provides detailed information on Invoice Factoring, Invoice Factoring Companies, Invoice Factoring Discounting, Invoice Factoring Rates and more. Invoice Factoring is affiliated with Loan Factoring.