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
my
company?
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.
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