Frequently Asked Questions
Accounts receivable funding is a widely used and viable financing solution for all types of businesses that extend credit terms to their customers. Here are some common questions our clients have asked.
1) How is accounts receivable funding different than a loan from a bank?
When making an accounts receivable funding decision, DSA focuses on the credit worthiness of your customers while banks will focus on your company’s financial history and cash flow. Accounts receivable funding is not a loan. It provides you with less debt on your company’s balance sheet. We can make a quick funding decision, while banks may take weeks or months to approve a loan.
2) Will my company be eligible for accounts receivable funding if it has a bank loan or line of credit?
If a bank has a lien on your company’s accounts receivable, you should let us know right away. We will ask the bank to subordinate that lien. Some banks will accommodate the request and others may decline depending on your circumstances. Our number one referrals come from loan officers willing to help out the client in cash flow needs. They are very familiar with this kind of financing. The other alternative is to pay off the loan if there are plenty of receivables to leverage the buy out.
3) What information will you need from my company to begin the accounts receivable funding process?
A short application, your company’s most recent accounts receivable and accounts payable aging reports, Articles of Incorporation or d/b/a/ filing, a master customer list and a sample invoice.
4) Which customers would be good candidates for accounts receivable funding?
Usually 80% of your business comes from 20% of your customers and these would be the most likely to factor, however, we will factor 100% of your customers so long as they are credit worthy. In order to approve your customers, we will need their names, addresses, phone numbers and the amount of the order for each customer.
5) Can you purchase only a portion of my company’s invoices or one customer?
Yes, so long as it is not a one time deal.
6) How long does it take to receive the first funding?
The initial funding takes between 1–3 business days after we receive your signed agreement. If you wish, you can send some invoices to be funded with the signed contract in order to expedite your funding. After the initial funding, your company can receive funds within 24 hours after invoice receipt.
7) How much of my company’s accounts receivable can be funded?
We can fund up to 100 percent of your company’s creditworthy accounts receivable and depending on the industry, we may fund up to 96%* advance.
8) What should I do if my customer mistakenly sends the payment to
The answer to this question will apply to any factor you deal with. This is very common especially with the first initial funding. If this occurs, the check must be sent to us immediately. There is no need to even endorse it. Your company should never deposit invoice checks that were already purchased by a factor. Your customer will be notified to pay us directly in the future.
9) How can I be certain that your company will treat my customers well?
The last thing we want is for you to lose a customer. We are not a collection agency. We will never harass your customers for money. Maintaining your customers’ goodwill and confidence are of utmost importance to us!
* After reserve is met.