Invoice factoring is the perfect way to improve your cash flow so that you can grow your business. Rather than waiting around 30 days to get paid for a product or service you have already provided, you can get funded the same day you invoice with invoice factoring. Factoring is not a loan, the funds you receive are your to keep. If you have accounts receivable, give DSA Factors a call today at 773-248-9000 and we can be funding you in as little as 24 hours.
Whether you are manufacturing, importing, or providing a service, with invoice factoring you can improve your cash flow. Allowing you to expand your customer base, and give you the confidence to soar your business to new heights. All it takes is one phone call and you can be on your way to growing your business!
What are you waiting for? Give DSA Factors a call today and start watching your business grow!
Last week’s Casual Market at the Merchandise Mart in Chicago was a successful one. While many of the exhibitors noted that there was lighter foot traffic than there had been in previous years, they mentioned that more of the attendees to the Casual Market knew what they were looking for going into the show and were placing orders. Here at DSA Factors we can already confirm this as several of our clients have already submitted numerous orders for approval this week, most of which are coming from brand new accounts. In fact one of our clients has already received over $100,000 in orders from brand new accounts and it has only been a week since the market came to a close!
The show featured quite a few new exhibitors, many exhibitors who were new to the show last year and were returning for their second show, as well as all of the usual exhibitors who have been making the annual trip to the Mart for a long time now. Once again DSA Factors was present at the show and if you were exhibiting there is a very good chance that you would have spoken with Ben. However, if you somehow missed Ben at the show, or you didn’t attend this year, don’t worry, he is always available and can be reached by phone at 773-248-9000 or via e-mail at email@example.com.
For those of you unfamiliar with the Casual Market Chicago, it is the premier trade show for the casual furniture industry and is put on each September at the Merchandise Mart by ICFA (International Casual Furnishings Association). It features a large number of temporary exhibitors on the very busy seventh floor, as well as several floors of permanent showrooms. Exhibitors at the show sell everything including outdoor dining sets, chat groups, fire tables and fire pits, outdoor fabrics, cushions, umbrellas, hammocks, bean bag chairs, grills, outdoor rugs, lighting, wall decor, and everything else you would need to complete an outdoor room.
There are a lot of different accounts receivable factoring companies out there, and for most businesses looking to factor, the biggest concern is how much factoring will cost them. While a low factoring rate is very important, it is also important to make sure that when you get two different rates that you are comparing apples to apples. It isn’t only looking at services such as advance rates, approval rates, or recourse vs non-recourse, but also looking at fees and interest charges. So while you could call five, ten, fifteen, or even twenty factoring companies to find out their rates, it might not be so clear-cut as to which company is the cheapest and provides the best service. This article will show you how to find the best factoring company for your business.
Adjustable Rate Factoring vs Flat Rate Factoring
Adjustable Rate Factoring
There are two different types of rates that a factoring company may charge you. The most popular type of factoring these days is adjustable rate factoring. With adjustable rate factoring the factoring company will offer what seems like an impossibly low rate, they may advertise anything from .5% to 1% as a base rate for factoring your invoices. However, they will then charge you interest from the day they advance you the money until payment is received and then they will add an additional 10 days for payment to clear the bank. The way that this interest is computed can vary, but it is most common for factoring companies to use blocks. A block may be a period of 10, 15, or 30 days. For each block that passes, the factoring company will charge you an additional fee. For example, if a factoring company offers a .5% base rate and uses 15 day blocks and charges 1% for each block, this how you would be charged for factoring an invoice. Lets say the invoice is purchased on July 1st, then you will be charged the base rate of .5% for factoring on that day, in addition you will also be charged 1% for the first 15 day block. On July 15th if payment has not been received yet and cleared the bank, then another 1% will be charged for the 2nd 15 day block. Lets say payment is received August 10th, you will be charged another 1% on July 30th, and on August 14th, since the factoring company is still waiting for the funds to clear the bank, you will be charged a final 1%. As a result, your overall costs for factoring the invoice will be 4.5%.
Flat Rate Factoring
With a flat rate factoring program your factoring fee is much easier to compute. If you are offered a rate of 4% then that is exactly how much money you will pay for factoring the invoice, regardless of how long it takes your customer to pay your factoring company. While the base rate may appear much higher with flat rate factoring, the actual rate you pay to factor an invoice is typically lower, especially if your customers don’t pay their invoices early.
While the overall rate may be the main reason why you choose to go with an adjustable rate or flat rate for your accounts receivable factoring, it is also important to consider the service that goes along with these two different rate structures. With an adjustable rate, the longer it takes your factoring company to get paid, the more money they make. As a result, an adjustable rate factoring company has little motivation to collect from your accounts until they start to become seriously past due. With a flat rate factoring program, your factoring company is very motivated to collect from your accounts when the invoices become due. This motivation to collect doesn’t just affect how much you pay for factoring, but can also affect if future orders from your customers get approved. If a customer is past due on your invoices, then they won’t get approved until they catch up. As a result a factoring company with an adjustable rate may not be able to get you approvals in a timely fashion causing your customers to become upset.
The Advance – Improved Cash Flow
Perhaps the most important reason why companies want to factor their invoices is because of the advance that provides them with the improved cash flow they need. When choosing a factoring company, the most important question should be if they provide an advance and how long it takes. Most factoring companies should be able to provide you with an advance on your receivables within 24 hours, or even the same day. A factoring company who is offering you rates to good to be true may not be providing you with an advance. After that you need to look at the rate of advance. All factoring companies hold back money in reserve, but some companies hold back more than others. However, rather than advertise how much they hold back, factoring companies prefer to advertise how much they advance. So if a factoring company holds back 10%, then they have an advance rate of 90%. Advance rates can vary anywhere from 75%-90%, so it is important to make sure that you are getting a high advance rate.
Recourse vs Non-Recourse Factoring
Another benefit of factoring is the insurance that it provides on your receivables. A company that offers non-recourse factoring will insure your receivables against non-payment for financial reasons, meaning for example, that you will not be on the hook if a customer of yours goes bankrupt. However, if your factoring company only offers recourse factoring then they are not providing you with any insurance, and you will be have to pay them back if one of your customers files for bankruptcy.
Approval Rate and Credit Limits
Because a factoring company may be insuring your receivables, they are also assuming some risk. How much risk they are willing to take can vary. As a result it is important that you choose a factoring company with a high approval rate. It is also important to learn about how your factoring company assigns credit limits. It is important that your factoring company assigns your customers a credit limit based strictly on your business with them. Some factoring companies assign a single credit limit to a business that applies across all of their clients, as a result, if another client has orders that reach that credit limit, your orders will get turned down until that other client’s invoices are paid off.
Hidden Fees and Commitments
Of course the last thing you want is to get a bill from your factoring company asking you to pay a bunch of hidden fees. Many factoring companies may charge you fees for day-to-day operations such as running a credit report. Other companies may charge you annual fees or fees for not meeting minimum volume requirements. While some companies may lock you into a long-term contract and will charge you fees if you choose to stop factoring or want to change factoring companies. Another thing to consider is whether you are required to factor all of your accounts. Some factoring companies will require you to factor all of your accounts, including ones that pay on credit card, meaning that you will be forced to pay factoring fees even on accounts that you don’t factor. It is important that you look at these fees as they of course affect the overall rate that you are paying to factor your receivables.
Service and Benefits
Finally, the last thing you need to look at it is the service and benefits that your factoring company can provide you with. When it comes to service, many larger factoring companies will treat you simply as a number and assign you to an account manager who may not be able to make difficult decisions. Often times these larger factoring companies are owned by banks or are headquartered overseas, meaning that it may take them a long time to make simple credit decisions. With smaller factoring companies, and especially family owned companies, you will always be able to speak with one the companies principals, and quick turn-around times on credit decisions or anything else are another advantage that they offer. Of course, sometimes you need a little bit more than just factoring, so it is important to look at some of the other benefits factoring companies may offer.
Sometimes when you get a large order from a major retailer you may need a little extra help fulfilling the order. As an importer you may need to pay the overseas factory to start production, and certainly they will want payment in full before a container is released. As a manufacturer you may need funds to purchase additional materials so that you can start production. Whatever the case may be, some factoring companies offer purchase order financing, which is basically a short term loan based on the purchase order so that you have no problem getting the order fulfilled. Even if you don’t need purchase order financing right now, it is important to choose a factoring company that offers it to their clients as you never know if you one day may need it.
Small Business Loans
Some factoring companies may even offer their clients small business loans in addition to factoring services. If you might need a loan from time to time, whether you need to pay to attend a trade show, or you are developing a new product line, it is nice to know that your factoring company may be able to help you out. Since you will have established a working relationship with your factoring company, they will be much more likely to offer you a loan than a bank, and will also make a decision much quicker.
Choosing the Right Factoring Company
As you can see, there is a lot that goes into choosing the right factoring company for your business. At DSA Factors we offer low, competitive, flat rate factoring fees with the personalized service that you would come to expect from any family owned and operated business. Our clients receive non-recourse factoring with a 90% advance rate. Furthermore, we have an approval rate of over 95% and most companies get approved instantly when submitted on our web page. We have no hidden fees, no minimum volume requirements, and no long term commitments. We also offer purchase order financing to our clients and have offered small business loans to clients who we have developed a working relationship with. DSA Factors is well known throughout the factoring industry as one of the best companies to work with, earlier this year we were named by Factoring Club as the Best Micro Factoring Company for 2016. If you are looking for a factoring company to help grow your business, give DSA Factors a call at 773-248-9000, and find out just how easy factoring can be.
Americans are on the move according to a recent survey done by Furniture Today and Apartment Therapy. Nearly 60% of Millenials and 40% of both Generation X and Baby Boomers plan on moving in the next three years. In fact, nearly a quarter of all Millennials plan on moving in the next year. While 27% of the people planning to move would like to move out of state, not everyone is looking for a change of scenery. 83% of city dwellers plan on staying in the city, while 66% of suburbanites plan on staying in the burbs. The real change comes from people living in rural settings, only 52% of them wish to remain in the countryside, while 28% of them want to move into a city, and the remaining 20% wish to move to the suburbs.
For the most part Americans want to live in houses. Nine out of ten Millennials say their next home will be a house. This number drops to eight out of ten for Generation X and six out of ten for Baby Boomers whose next move will put them in a house. Condos are the next most popular place to live. While only 3% of Millennials wish to live in a condo, 10% of Generation X and 26% of Baby Boomers say their next home will be a condo. Apartments are not very popular right now, only 5% of Millennials want to move to an apartment, and this number drops to 4% for Generation X and 2% for Baby Boomers. In fact four out of ten renters plan to own their next home, and a third of apartment dwellers plan on moving into a house next.
When it comes to the size of a home, about half of all Americans plan on moving into similarly sized home as their current home. Almost half of all Millennials are looking to upsize, with about a third of Generation X and a fifth of Baby Boomers looking to upsize as well. For those looking to upsize into a larger home, they are looking for another 550 square feet on average. Not too many Americans are looking to downsize, but it should come as no surprise that downsizing is most popular with Baby Boomers, just over a third of them would like a smaller home.
With all of these people on the move it means that there will be plenty of opportunity for the furniture and housewares industries to cash in on these movers. If you are a manufacturer or importer it is important that you are prepared to serve these growing numbers of transient Americans. Let DSA Factors help you by factoring your accounts receivable and giving you the cash flow you need to grow your business. Call us today at 773-248-9000 to find out how DSA can help your business grow.