News and information about accounts receivable financing for the furniture, bedding, giftware, housewares, textiles, trucking, and other industries.
Insurance is a product that everyone is familiar with. You have it for your car, you have it for your home, you have it for your health, and you may even have it for your life. But did you know that your business can also have insurance for its receivables? With non-recourse factoring you not only benefit from improved cash flow and outsourcing your credit checking and collection work, but you also get insurance on your receivables. If one of your customers is unable to pay for your product, whether it is due to bankruptcy, out-of-business, or any other financial reason, if you have non-recourse factoring then this becomes the responsibility of your factoring company.
It may seem strange that accounts receivable factoring, a form of financing that dates back further than the Silk Road, could fit into the modern world of Fintech, an industry that is less than a decade old. However, like any business that has survived since antiquity, accounts receivable factoring has constantly evolved with changing times and in many ways pioneered the path for the new Fintech industry. While you would be hard pressed to find an a true factoring company that only exists in the online realm, you would be just as hard pressed to find a traditional factoring company that doesn’t offer a large variety of online tools.
In the same way that online banking and ATM machines have made it so many Millennials never had to write a check or step inside a bank branch location, accounts receivable factoring can now provide your business with the financing that you need without needing to walk away from your computer. In fact, here at DSA Factors we’ve been offering online tools to our clients for over a decade now. So in many ways, we were a Fintech company before Fintech even existed. But unlike Fintech, we haven’t stripped down our factoring program to only offer the services and benefits that a web page can provide. Plus we are still happy to work with clients who prefer doing things the old fashioned way, via phone, mail, and fax.
Online Credit Approvals
For years now, offering online approvals has been a standard service that accounts receivable factoring companies have offered. What this means is that when you get a purchase order, you just login to your factoring company’s portal and request an approval. Often times the computer is able to make an actual credit decision on the spot and offer you an instant online approval. Of course, as in any business, there is a limit to what can be completely automated, so in the case where the computer can’t approve an order, it gets sent to your factoring company’s office for review. When this happens at DSA Factors, we do our best to get back to you with a credit decision within 30 minutes, and will e-mail the credit decision to you.
Real-time Aging Statements
Most factoring companies will provide their clients with aging statements each week so that they know where their accounts stand. At DSA Factors we take this one step farther. At any time our clients are able to login to our portal and view a real-time aging statement.
View Transmittal Sheets
Just like how banks and credit card companies allow you to view statements online, at DSA Factors we give our clients to view transmittal sheets from our online portal. And unlike banks or credit cards that may limit you to only one or two years of statements, here at DSA Factors you can go back as far as you want to that very first payment we sent you when you first started factoring.
Access to a Variety of Online Reports
In addition to aging statements and transmittal sheets, at DSA Factors we offer our clients a variety on online reporting options. This includes being able to pull account statements for any customer. Viewing all open or used approvals. Pulling sales reports that show you how much volume each of your customers gave you over a specified period of time. Plus, if there is a report that you would like to see on the portal, all you need to do is give us a call and we will do our best to create it for you. As a family owned business, we pride ourselves on the quality service we provide our clients with, and that extends to the online services we provide as well.
Allow Customers to Pay Online
At DSA Factors we don’t just extend online benefits to our clients, but also to their customers. At any time your customers may login into our portal with a login and password we provide at the bottom of every account statement we send them so that they can view a real-time statement and make payments online. After all, don’t your customers deserve access to the same online conveniences as you.
Why Choose Accounts Receivable Factoring Over Fintech?
If the online services that we offer at DSA Factors doesn’t seem like enough, keep in mind that we offer one huge benefit that no Fintech company is able to offer. At any time you are able to pick up a phone, give us a call, and one of our principals will be able to talk to you and help you come up with a solution that works for you. That isn’t something that you will get from a large Fintech company, that is something that you can only get from a family owned accounts receivable factoring company. And the value of being able to speak with someone who can actually help you and cares about your business, is much greater than the inconvenience of being limited to only the functions that a web page is able to handle.
If you want to improve your cash flow, outsource you accounts receivable, get credit insurance, and have the convenience of being able to work online, but still want the personalized service that you deserve, give us a call today at 773-248-9000. Or if you want to go “Fintech”, feel free to send us an e-mail at firstname.lastname@example.org or chat with us right now on this web page.
Often times for a new startup business, it can be difficult to obtain financing. SBA loans are usually out of the question as banks will want to see a track record and will require collateral that a startup business most likely wouldn’t have. Venture capital is an option, but is usually reserved for tech companies that have a huge potential for growth, plus often times it requires you to give up ownership of your business. However, accounts receivable factoring is a great way for a startup to finance their business without having to give up any ownership or taking on new debt.
What is Accounts Receivable Factoring?
Accounts receivable factoring is a type of financing where you sell your receivables to a factoring company for a discount. For startups the main benefit is that you get funded the same day you invoice your customers rather than having to wait 30 days or longer for them to pay you for goods or services that you have already provided them. As a result you have healthy cash flow so that you can take on more orders as well as larger orders without having to worry about how you will pay your suppliers. Since you are selling your receivables to your factoring company, the funds they provide you with are yours to keep, there is no need to repay your factoring company as your customers will be paying them once their invoices become due. As a result accounts receivable factoring is one of the few financing options available that doesn’t require you to take on any new debt.
Additional Benefits of Accounts Receivable Factoring
While improved cash flow may be the main reason a startup business would use accounts receivable factoring, it isn’t the only one. Since your factoring company is relying on your customers to pay their invoices in order to get repaid, your factoring company will also handle all of the credit checking for you. For a startup business the last thing you want to do is spend several thousand dollars subscribing to a credit agency so that you can determine whether or not an order you receive is from a credit worthy company. Your factoring company will also handle all of your collection work so there is no need for you to spend time making collection calls and no need to purchase accounts receivable management software. Finally, with non-recourse factoring, your receivables are insured against non-payment for financial reasons. So if one of your customers goes bankrupt or out-of-business you still get to keep the funds that your factoring company gave you.
How Does My Startup Business Qualify for Accounts Receivable Factoring?
Unlike a traditional bank loan, accounts receivable factoring is not a loan, your factoring is instead extending a line of credit to your customers. As a result, your factoring company isn’t too concerned with your company’s credit or your personal credit, but rather with your customer’s good credit. So as long as you are selling to reputable businesses you qualify for accounts receivable factoring.
How Much Funding Can My Startup Business Receive with Accounts Receivable Factoring?
With accounts receivable factoring there is no limit to how much funding you can receive. The amount you are funded is tied directly to how much you have in receivables. So as your receivables grow so does the amount of funding you receive. While your factoring company will assign credit limits to your customers, since you are not receiving a line of credit there is no limit to how much you can get funded.
So What’s the Catch?
Obviously there are fees associated with accounts receivable factoring and these fees can vary based on which factoring company you choose to factor with. At DSA Factors we offer a flat rate factoring fee, meaning that we do not charge you interest if your customers do not pay their invoices on time. The factoring fee we charge is very similar to a payment processing fee that you would pay to take a credit card. So if you can afford to take a credit card, you can afford to offer your customers net 30 payment terms with accounts receivable factoring. While every factoring company charges a factoring fee on each invoice they purchase, these rates do vary and you may be subject to other fees as well. At DSA Factors we do not have any annual fees, there are no fees for setting up new accounts, we have no minimum volume requirements, and we have no long term commitment. Please read our article on how to find the lowest rate for accounts receivable factoring to learn more about what types of fees you can expect to pay for factoring.
What if I Need Additional Help Financing a Large Purchase Order?
Sometimes waiting until you invoice to get funded isn’t enough, especially if you need to pay your factory for a container before they will release it. In situations like this your factoring company may offer you purchase order financing. Purchase order financing is a short term loan that allows you to pay for a container in order to fulfill a large order. Even though you may not qualify for a business loan, since you have developed a relationship with your factoring company, and you will be factoring an invoice as a result of the purchase order, your factoring company may be willing to give you a short term loan to finance the purchase order.
So How Do I Get Started With Accounts Receivable Factoring?
Factoring is a fast and easy process where credit decisions are made in minutes, not months. Getting started is easy, give DSA Factors a call today at 773-248-9000. With just one call you can be well on your way to getting the financing your startup business needs to succeed. We can be funding you for your invoices in as little as 24 hours.
Everyone knows that accounts receivable factoring has been around for a while, in fact, if it wasn’t for factoring, in fourteen hundred and ninety two, Columbus wouldn’t have been able to sail the ocean blue. However, in recent years, in response to rapidly developing technology and an unwillingness by banks to lend money, a large number of fintech companies have emerged offering entrepreneurs a variety of ways to raise money for their businesses. These fintech companies offer everything from crowdfunding to factoring. However, it is important that you compare the services that these new fintech companies provide as well as the fees they charge to more established funding sources.
Crowdfunding vs Venture Capital
Crowdfunding is indeed an excellent alternative to venture capital. Companies like Kickstarter and Indiegogo allow start-ups to raise money for their business through pre-sales, rather than receiving loans or giving up a percentage of ownership to venture capitalists. So not only does crowdfunding allow you to maintain ownership of your business without taking on new debt, but it also provides young companies with advertising and the chance to build up a large and enthusiastic customer base. Of course crowdfunding isn’t free, you will have to pay a commission on any funding you receive in addition to payment processing fees, but then again venture capital isn’t free either. The other big difference between crowdfunding and venture capital is the scale. Typically crowdfunding works on a much smaller scale, giving new start-ups the ability to raise thousands, tens of thousands, and occasionally hundreds of thousands dollars. Venture capital on the other hand isn’t always all that interested in such small investments, but could be a good place to start if you are looking for a million dollar deal.
While crowdfunding is a great way of getting your product seen and sold directly to consumers, it does not typically help you with funding large orders from retailers. For this, an excellent alternative to venture capital is purchase order financing, which is a service provided by many traditional accounts receivable factoring companies. With purchase order financing you can obtain a short term loan based on a purchase order, and then you pay back that loan by ultimately selling the invoice associated with that order to your factoring company.
Fintech Factoring vs Traditional Accounts Receivable Factoring
Factoring has always been an excellent alternative to getting a bank loan. However, fintech factoring companies haven’t really innovated the factoring industry, but rather offer short-term, high-interest small business loans that improve your cash flow, but don’t provide the other services that traditional factoring companies provide you with. Like traditional factoring, the fintech factoring companies are not too concerned with your business’s or your personal credit, meaning that companies that do not qualify for a traditional bank loan will qualify for a loan with them. However, coming from their IT backgrounds, the principals of these firms don’t have any real experience in the factoring industry, nor do they understand all of the benefits that traditional factoring offers small businesses.
In an interview with ABF Journal, George Bessenyei, director of 48 Factoring, stated “we are not coming from the financial space, we are coming from a technology space. I see us as a technology company that provides finance.” In another interview with ABF Journal, Eyal Lifshitz, CEO of BlueVine said “I was looking for a way to disrupt the lending industry. I started learning about factoring. I wanted to modernize it and make it a streamlined process where the borrowers can click a button and get money.” While it is true that these new fintech companies have streamlined the process of getting funded so it can be done entirely online, they also stripped-down factoring to its bare bones. Key aspects of factoring such as not taking on any new debt, outsourcing your credit checking and collections, insuring your receivables, and an unlimited potential for funding have been eliminated by the fintech factoring companies.
While fintech factoring may offer a faster, more streamlined approach to getting funded, and its rates mirror traditional accounts receivable factoring rates, they actually will cost you quite a bit more both timewise and financially than traditional factoring. Because fintech companies don’t handle your credit checking, you are still responsible for assessing the credit worthiness of your customers and will need to subscribe to expensive credit agencies in order to do so. You are also responsible for handling all the collection work, which as your company grows could eat up much of your time or require you to hire additional employees. Finally, without credit insurance, when a customer is unable to pay an invoice, you are out the money. While you could be very conservative in who you offer payment terms to, doing so will mean that you will be turning down a lot of business that a traditional factoring would most likely be willing to improve. Alternatively, for large orders, you can purchase credit insurance for an additional charge from insurance companies.
Technological Innovations Offered by Accounts Receivable Factoring Companies
It is true that accounts receivable factoring may be old, but that doesn’t mean that traditional factoring companies don’t innovate. The fact is, traditional factoring companies have been using innovative software and providing online tools to their clients for many years now. Nearly every traditional accounts receivable factoring company allows their customers to submit accounts for credit approval online, and oftentimes can provide their clients with instant approvals directly on the web page. Invoices can also be sent via e-mail to ensure speedy processing. Plus, your factoring company has the ability to pay you via ACH or wire so that funds are electronically deposited into your bank account as opposed to having to wait for a check to arrive in the mail and then take it to a bank. While the process might not be as streamlined as fintech factoring, accounts receivable factoring companies always pride themselves on speedy turnaround and funding you within 24 hours, if not the very same day that you submit your invoices to them.
Another common misconception that fintech factoring companies have about traditional factoring is that accounts receivable factoring companies are all owned by banks and only care about large accounts doing millions a year in sales. While it is true that many factoring companies are owned by banks and prefer not to deal with smaller businesses, this is not true of all factoring companies.
DSA Factors has always been family owned and operated, and we provide factoring to all businesses regardless of how much volume they do. At DSA Factors we have always been innovating ever since we started factoring in 1986 and programmed our very own factoring software using Basic on DOS 3.3 computers. While we have long ago moved on from our original software, we still continue to develop all of our own software and are continuously improving it in order to give our clients more options in how we finance their businesses. Today we offer online instant approvals to our clients along with a number of online reports including real-time aging statements as well as give them the ability to view previously paid transmittal sheets for as long as they have been factoring with us. Additionally we provide your customers with a login where they can view an account statement and make payments online. We even welcome ideas from our clients on how to improve our online portal so that they can get the most out of our factoring services. So if you are looking for financing and want a factoring company that combines technology with knowledge, experience, and service, look no further than DSA Factors. Give us a call today at 773-248-9000 and one of our principals will be more than happy to speak with you.
Micro factoring is just like normal accounts receivable factoring, only it is on a smaller scale. If you are self employed, it can be very hard to find financing in order to grow your business. Even worse, as your business begins to grow, you are bound to experience a number of growing pains. While the most obvious growing expense may be rent as you outgrow your small office, basement, or garage, other expenses may include book keeping software, subscribing to expensive credit agencies, and you may even need to hire some employees to help you keep the business running. While micro factoring can’t help you cut your rent expenses, it can help you with cutting all those other expenses, while making paying the rent a little bit easier as well.
Are There Additional Benefits of Accounts Receivable Factoring?
Besides the improved cash flow, factoring offers several other very important benefits. Your factoring company will handle all of your credit checking for you, eliminating the need for you to subscribe to expensive credit reporting agencies. You factoring company also handles all of your collection work, meaning that you don’t need to spend all of your free time making phone calls to customers who haven’t paid their bills yet. Plus, since your factoring company has a large client base, they most likely have several other vendors who sell to your customers meaning that they have more leverage in receiving prompt payment for your invoices. Finally, with non-recourse factoring, you also receive insurance on your receivables. That means that if one of your customers is unable to pay due to financial problems, you still get to keep the funds your factoring company gave you.
For small businesses it can be very difficult to work with most factoring companies as they may require long term commitments and have minimum volume requirements. If your factoring company has a minimum volume requirement of half a million dollars, and you only factor a quarter of million dollars or less in any given year, then your factoring company will still charge you fees based on half a million dollars. With micro factoring you do not need to worry about meeting minimum volume requirements each year. Even if you only have $20,000 in annual sales, you only pay factoring fees on the invoices you factor. At DSA Factors we are proud to offer our factoring services to companies of all sizes and never have any minimum volume requirements. Furthermore, at DSA Factors we have no long term commitment, so you can stop factoring at any time and there is never any penalty for doing so.
What About Funding for a Large Purchase Order?
While factoring provides you with funds for merchandise that you have already shipped to your customers, sometimes it isn’t enough to help you taken on larger orders. Rather than turn down large orders from large retailers, with purchase order financing you can get a loan based on a purchase order so that you can produce the merchandise required for a large order. With purchase order financing you will receive a portion of the future invoice’s value up front so that you can produce the merchandise, and then when you actually ship the merchandise to your customer and invoice them, you will receive the balance of the invoice’s value. Even if you don’t have any large orders yet, it is important to factor your existing customers so that you have already established a relationship with your factoring company for when you do get that first large order.
Why Choose DSA Factors?
At DSA Factors we realize that we aren’t the only factoring company out there, but we offer exceptional service at very competitive rates. As on of the few family owned and operated factoring companies out there, you can always speak with one of our principals anytime you call, you will never just be handed over to an account manager. We have been factoring for over 30 years and understand the industry and what it takes to help our clients grow their businesses. We can handle any size client, we have clients who do as little as $30,000 in sales each year to clients who do millions in sales each year. Plus, we have no long term commitment so you can always stop factoring at any time if you decide that factoring isn’t right for your business. So give DSA Factors a call today at 773-248-9000 and learn just how easy it is to receive the funds you need to grow your business.
For most small business owners, obtaining a line of credit from a bank has never been easy. In recent years a number of technology companies have discovered this problem and it has led to the emergence of fintech, a form of online lending. However, what many small business owners don’t realize is that there is another alternative to the banks, which is factoring. Factoring companies however offer a whole lot more than the fintech companies, but also have much more experience and knowledge, better customer service, and typically cost less.
Fintech companies provide their customers, who don’t qualify for a small business loan from a bank, with short-term, high-interest loans using their receivables as collateral. Because they are using receivables as collateral, companies such as BlueVine claim that they provide accounts receivable factoring, but really they are just providing their customers with a loan. Other companies like Fundbox claim they provide invoice financing, which they differentiate from factoring. While it is true that they do not provide factoring, what they don’t realize is that invoice financing and accounts receivable financing mean the same as factoring. This demonstrates a very big difference between fintech and factoring. These fintech companies are really young IT start-ups with little or no experience in the industries that they serve; in fact, they may not even know basic industry terms. Factoring on the other hand has been around for hundreds of years, even Christopher Columbus used factoring. While most factoring companies haven’t been around quite that long, they all have quite a bit of experience and a background in the industries that they serve. For example, DSA Factors started off as the consumer finance arm of a retail furniture store under the same ownership. Eventually they decided to start offering factoring services to furniture and bedding wholesalers who they bought from. As the factoring business grew they started expanding out to other industries such as giftware, housewares, apparel, and trucking. Now, having factored for over 30 years, they are still helping small and medium sized businesses grow.
Improved Cash Flow – Debt vs No Debt
While the goal of both fintech and factoring is to help you improve your cash flow, perhaps the biggest difference between fintech and factoring is how they accomplish this. A fintech company provides you with a loan, meaning you are taking on debt. Furthermore, the loan has a very short term and if you offer extended terms, such as net 90 days, to your customers, it is quite possible that the loan will become due before you receive payment on the invoice that was used as collateral. With factoring, the factoring company is purchasing your accounts receivable, or invoices. The funds you receive from a factoring company are yours to keep and spend however you like. Even if one of your customers pays late, you don’t need to worry about paying back the funds you received.
Accounts Receivable Outsourcing
Of course services provided are another really big difference between fintech and factoring. Fintech companies seem to pride themselves on how they will never contact your customers; they seem to think that you will appreciate this. However, all that this means is that if your customers don’t pay them, they will come after you. With fintech you still need to stay on top of your accounts receivable and send out statements and make collection calls. For a small business this means that the owner typically needs to spend a lot of time just trying to get paid by their customers. For medium sized businesses you will probably need to hire another employee just to manage your accounts receivable, meaning additional payroll. With factoring you are outsourcing your accounts receivable. Factoring companies have already invested heavily in the software necessary to manage A/R, and are able to do so because they manage A/R for many clients. They have professional and courteous collectors who are able to make the phone calls for you. Plus, because your customers may purchase from several other vendors who factor their receivables, a factoring company has a lot more leverage in collecting from a customer who may not be willing to pay. The fintech companies try to scare you by saying that factoring companies can ruin your relationship with your customers, but this couldn’t be further from the truth. Factoring companies are not collection agencies, they understand the importance of the relationship you have with your customers, after all, they have a similar relationship with you. As a result, your factoring company provides your customers with gentle reminders that payment is due, and always treats your customers with the respect they deserve.
Another big difference between fintech and factoring is the insurance they provide. With Fintech you receive no insurance on the invoices you put up as collateral, if the invoices don’t get paid, you still have to pay back the fintech company. However, many factoring companies, such as DSA Factors, provide non-recourse factoring, meaning that you are insured in the situation where one of your customers is unable to pay due to financial problems. Furthermore, since your factoring company is insuring your receivables, they also handle all of your credit checking for you, meaning that you don’t need to subscribe to expensive services such as Dun & Bradstreet. While it is possible to purchase credit insurance separately, it of course comes with additional fees, and typically only covers large orders for very creditworthy companies such as Amazon or Walmart. If your customers are mom and pop stores, or your invoices are smaller than five or six figures, credit insurance is not something that is readily available to you.
Purchase Order Financing
Of course, for many small companies simply getting funded for your invoices isn’t enough. For a company that has just received their first six figure purchase order, it may be very difficult to put that order together. To make matters worse, if you are unable to accept such a large order, it is unlikely that the company placing the order will come back to you in the future. If you manufacture in China you typically need to put 30% down to start production and then a month later when production is complete, pay the remaining 70% to get the merchandise put onto the boat. It will be another month before the container arrives in the US and you are able to ship and invoice your customers, and a fintech company will not provide you with a loan until you do so. For service companies you may need to hire additional labor and will need to meet payroll long before you complete the job and invoice your customer. If use fintech for your financing they won’t lend you the capital in advance, and you won’t be allowed to take out a loan with a bank. However, many factoring companies, such as DSA Factors, will provide their clients with purchase order financing, which is a short term loan based on the PO so that you can fulfill a large order.
Finally there is one more major difference between fintech and factoring companies, and that is customer service. Fintech companies are all about technology; they integrate with business software such as QuickBooks, and believe that customer service is about giving their customers fancy online tools. Of course this means that you too need to use QuickBooks or whatever other software they may integrate with. Factoring companies on the other hand realize that a big part of doing business is developing a relationship with the people they work with. Perhaps factoring companies don’t offer all the fancy technology and software integrations as the fintech companies do, but they aren’t dinosaurs. Nearly every factoring company has an online portal where their clients can login, request approvals, and view a variety of reports. While there are some large bank-owned factoring companies, there are also plenty of family-owned factoring companies such as DSA Factors. At DSA Factors you can always call and speak with a principal, no need to deal with account managers or low-level employees who can only answer simple questions. As a result, factoring companies are able to work with you creatively and aren’t restricted to just the 1’s and 0’s of the digital fintech world.
Choose Your Financing Carefully
When it comes to financing your small business it is important that you look at the big picture. While fintech may be new and exciting, you get a whole lot more with factoring. Plus, with factoring you most likely will save money as well!
If you would like to give factoring a chance, call DSA Factors at 773-248-9000 and either Ben, Max, or Howard will be available and able to help you. There is no obligation or long-term commitment, and you can start receiving funds in as little as 24 hours. Start growing your business today with a time-tested and proven method that works, accounts receivable factoring.
Starting a new business or growing your existing business can be a daunting task, especially if you don’t have the cash flow necessary to pay your suppliers, meet payroll, make rent, or take on large orders. While many business owners are familiar with SBA loans, the application process is lengthy and many businesses who apply don’t qualify for a loan. Oftentimes you may miss out on a large opportunity while waiting for a bank to make a decision. However, with accounts receivable factoring, not only can you start getting funded within 24 hours, you will qualify for factoring even if you have less than stellar credit.
Factoring is one of the quickest and easiest ways to get instant cash flow so that you can start growing your business. In addition, factoring is not a loan, when you factor your invoices you are taking on no new debt, instead you are simply selling your receivables and getting funded immediately while still being able to offer credit terms to your customers.
The way factoring works is quite simple. When you sell your product to another business that is requesting payment terms, you invoice them and then need to wait 30 days or longer to get paid for the merchandise or service you provided. However, with factoring you will get paid the same day you invoice your customer. Your customers still receives the payment terms that they need, but when the invoice is due they pay your factoring company. As a result, you no longer have all of your money tied up in receivables, instead you have working capital that you can use for whatever you need it for.
In addition to improving your cash flow, factoring also allows you to reduce your expenses and cut losses. Your factoring company will provide all of the credit checking on your customers for you, eliminating the need for you to subscribe to expensive credit agencies. Your factoring company also handles all of your collections for you so you no longer need a dedicated employee handling your receivables. Finally, with non-recourse factoring, your factoring company insures your receivables, so you no longer need to worry about customers who are unable to pay for the merchandise you sold them.
If your business can benefit from improved cash flow, accounts receivable factoring might be just the tool you are looking for. At DSA Factors we have been providing accounts receivable factoring for over 30 years. We work with a wide range of industries including, furniture, bedding, giftware, housewares, textiles, apparel, food, trucking, marketing, staffing, and many more. Whatever your industry, if you have receivables, DSA Factors has the money you need to grow your company. Call us today at 773-248-9000 and we can be funding you in as little as 24 hours.
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 has been a lot of talk in the news about fintech (financial technology) lately. Certainly there is a lot to be said about alternative approaches to financing over more traditional methods offered by the banks. However, accounts receivable factoring has always been an alternative financing method over what the banks offer, and has a long track record of success. In fact, many of the fintech companies even offer factoring programs, but they tend to be bare bones versions of factoring that only offer some of the benefits gained by factoring, and oftentimes even charge higher rates than traditional factoring companies.
The factoring industry has been around for a long time. It was well established in Europe when the original colonists brought it over to America. In fact, the king and queen of Spain offered a form of factoring to Christopher Columbus when he wanted to set sail for the “New World”. While this may seem antiquated in our modern technology driven world, the fact is that most factoring companies do take advantage of modern technologies, offering most of the benefits of fintech, but with much more experience, a proven track record of helping to grow small to medium sized businesses, and much lower rates.
To see the difference, the chart below compares traditional factoring with DSA Factors to similar programs with PayPal Working Capital, Bluevine, and Fundbox, three of the more popular fintech companies offering similar programs to invoice factoring.
PayPal Working Capital
PayPal Working Capital
Take on New Debt
No, the funds DSA provides you with are yours to keep.
Yes, PayPal is offering you a loan, so you are taking on new debt.
Maybe, if your customers don't pay BlueVine, they will require you to pay them back after 90 days.
Yes, Fundbox is offering you a loan, so you are taking on new debt.
No, with DSA Factors we will fund you for all of your receivables.
Yes, the lesser of 18% of your annual sales on PayPal or $97,000.
Yes, $20,000 to $500,000 based on your company's credit.
Based on Your Credit
No, since DSA is giving your customers a line of credit, credit decisions are made based on your customer's good credit.
No, the loan amount is based on your annual sales volume with PayPal.
Yes, BlueVine will assign you a credit limit based on your credit worthiness.
Yes, Fundbox determines your credit limit based on your credit worthiness.
Charges You Interest
No, DSA offers a flat rate factoring fee.
Yes, the interest is charged to you up front when you get a loan, regardless of how long it takes to pay the loan off.
No, BlueVine also offers a flat rate program, but at 10-15% their rates are at least triple or quadruple the rate that DSA offers.
Yes, based on the size of the loan, Fundbox may charge you anywhere from 5-12% over the course of a 84 day loan.
No, DSA Factors has no problem working with extended terms.
Yes, PayPal requires you to pay back 10% of the loan every 90 days, with the full amount due in 540 days.
Yes, if payment has not been received after 90 days, you are required to pay back BlueVine.
Yes, you must pay off the loan in 12 weekly installments.
Yes, DSA Factors handles all of your collection work.
No, your customers must make payments through PayPal, but PayPal does not help with collections.
No, your customers are required to make payments to a BlueVine drop box or bank account, however BlueVine does not help you collect.
No, Fundbox does not handle collections for you, it is strictly a loan that you need to pay back.
Insure Your Receivables
Yes, with DSA's non-recourse factoring your invoices are insured against non-payment.
No, PayPal only does payment processing for you.
No, if an invoice has not been paid after 90 days of being funded for it, you are required to pay back BlueVine.
No, Fundbox is strictly a loan that must be paid back in 12 weekly installments.
Choose Which Invoices You Factor
Yes, DSA Factors does not require you to factor all of your receivables.
No, a percentage of all payments made through PayPal will be applied towards your loan.
Yes, you can choose which invoices you want to get funded on.
Yes, however there is a $100 minimum in order to get funded for an invoice.
Minimum Volume Requirement
No, at DSA Factors you are not required to factor a certain amount, and there are no annual fees.
Yes, PayPal requires you to pay back 10% of the loan every 90 days if you aren't doing enough volume.
No, BlueVine does not require you to fund a minimum amount each year.
No, Fundbox does not require you to draw a minimum amount each year, however, they will not fund you if an invoice is worth less than $100.
Long Term Commitment
No, with DSA Factors you can stop factoring at any time, but since many of our clients have been with us for over 20 years, we don't think that you will want to stop.
No, once your loan with PayPal is paid off you can start looking for alternative sources of financing.
No, BlueVine allows you to stop drawing on your line of credit at any time, but you will need to pay them back for any invoices that they have not received payment on.
No, once you have paid off your loan with Fundbox, you are free to pursue other financing options.
Charge Payment Processing Fees
No, DSA will never charge you for processing a payment.
Yes, you are required to accept payments through PayPal and pay their payment processing fees.
No, although BlueVine will funnel all payments into their account without your customers knowing that BlueVine is receiving the payment.
N/A, Fundbox does not process payments.
DSA offers its clients an online portal where they can get automatic approvals, view agers, remittance reports, and other reports in real time. Your customers may also go online to make payments.
With PayPal you get a loan online and customers make payments online.
BlueVine requires the use of Quickbooks or similar software to get funded.
Fundbox requires the use of Quickbooks or similar software to get funded.
Good Old Fashioned Service
As a family owned and operated business, you can call DSA at any time and speak with a principal who can come up with creative solutions to help grow your business.
PayPal doesn't even list a phone number on their web site.
BlueVine may have a phone number, but it is doubtful that you will be able to speak to anyone who can actually help you.
Fundbox may have a phone number, but it is doubtful that you will be able to speak to anyone who can actually help you.
As you can see, traditional accounts receivable factoring with DSA Factors offers all of the benefits that the fintech companies offer, along with many more. You still get an online portal where you can efficiently do business and your customers can make online payments, but you also can pick up a phone and speak with one of our principals at any time. As a result, we can come up with creative solutions for your business that might not fit into a fintech company’s software, such as purchase order financing. So if you are looking for ways to finance your business, go with a time-tested method that works, accounts receivable factoring. Give DSA Factors a call today at 773-248-9000 and we can be funding you in as little as 24 hours.
Many companies out there aren’t familiar with all of the benefits that accounts receivable factoring has to offer. While cash flow might be the main reason why companies use accounts receivable factoring, it is not the only one. Companies that don’t use accounts receivable factoring often times are missing out on the bigger picture, and as a result, may not be able to grow their business as quickly as they would like or as quickly as competitors who do factor their invoices. Below are some of the benefits of accounts receivable factoring.
Improved Cash Flow
The main reason why companies choose to factor their accounts receivable is for the improved cash flow that factoring offers. Rather than wait around 30 days or more to get paid for merchandise you have shipped or a service you have performed, with factoring you can get paid the same day that you invoice your customers. This improved cash flow can help you to make payroll, pay off your suppliers, or cover any other expenses you have in growing your business.
Larger Orders, Larger Accounts
While it is true, many customers are happy to give you a credit card when they place an order, when you offer your customers payment terms they are more likely to place larger orders with you. The reason for this is quite simple, cash flow is very important to them. Your customers are just like you, they’ve got payroll expenses, rent, and utility bills, plus they need to pay their vendors. Even if sales are slow, they still need to meet payroll, pay rent, and pay the utility bills, if they don’t they will face some pretty serious consequences. If their vendors require them to pay with a credit card, then they also need to pay that credit card bill on time and in full every month or they can be facing late fees and high interest rates. As a result a company that is giving you a credit card is going to be conservative with how much they are ordering, if they can’t sell it all between the time the order is placed and the time the credit card statement is due they will have some pretty serious problems. However, if you offer them payment terms they know that if they pay a few days late that there won’t be any consequences. As a result they will be more willing to place larger orders knowing that if it takes them a week or two extra to pay the bill that they won’t be facing any interest charges or late fees.
Then there are the big box stores and online retailers. If you want to sell Walmart, Costco, Amazon, or any of the other big boys, there is no way that they will give you a credit card, in fact they may even request longer terms such as net 60 or net 90. If you want to get these large accounts it is absolutely crucial that you offer terms.
Eliminate Bad Debt
With non-recourse factoring you no longer have to worry about bad debt because your factoring company insures your receivables. If one of your customers is unable to pay for the merchandise you shipped them due to financial hardship, including bankruptcy or out of business, your factoring company assumes full responsibility for the bad debt and you still get to keep the money that they gave you for the invoices. And unlike insurance companies who will only insure receivables for large corporations with great financial strength, such as Walmart, factoring companies are willing to take a lot more risk and will not just insure sure bets, but will also insure mom and pop stores, online retailers, and a variety of other businesses. So by factoring your receivables you not only improve your cash flow, but you also get insurance on the accounts that you need insurance on
Outsourcing your Accounts Receivable
With factoring you are also outsourcing your accounts receivable department which has several benefits. For one, you won’t need to have any staff dedicated to accounts receivable, which can lower payroll or allow you to refocus their efforts on another aspect of running your business. You also won’t need to subscribe to expensive credit agencies in order to stay on top of which customers are credit worthy, instead your factoring company will do this for you.
Your factoring company will also handle all of your collection work for you. Furthermore, your factoring company also has more leverage in collecting on seriously delinquent accounts than you would. Since your factoring company has a large number of clients, it is possible that they may have five, ten, or even more clients who sell also sell to your customer. If your customer doesn’t pay you then you will stop shipping them, however, they will still be receiving merchandise from other vendors who they pay in a more timely fashion. If your customer doesn’t pay your factoring company, then they will be cut off from a large number of their vendors.
No New Debt
When you factor your accounts receivable you aren’t assuming any new debt. Factoring is not a loan, the money you receive from your factoring company is in exchange for your invoices. Basically all you are doing is selling your invoices to your factoring company, and therefore the funds they provide you with are yours to keep. As a result you can spend these funds in any way you choose, these is no need to justify where the money is being spent like you would with a loan from a bank, the money is yours to spend however you wish.
Purchase Order Financing
While purchase order financing is not the same as accounts receivable factoring, it is a service that some factoring companies offer to their clients. Unlike accounts receivable factoring, purchase order financing is a loan. The loan is based on a purchase order that you have, and the funds you receive are to be used to fulfill that purchase order. Once fulfilled and the merchandise is shipped to your customer, you would factor the invoice and your factoring company will apply a portion of the invoice toward the loan they gave you and give you an advance based on the remainder.
How do I Start Factoring?
Factoring is quick and easy. Unlike securing a loan from a bank, factoring companies are able to make decisions in minutes rather than months. At DSA Factors we offer a simple flat rate fee factoring program and can be funding you in as little as 24 hours. We are a family owned and operated business that has been providing accounts receivable factoring for over 30 years. Call today at 773-248-9000 and find out just how easy factoring can be.
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.