How To Factor An Invoice

Turn your invoices into cash with accounts receivable factoringSo you’ve heard about accounts receivable factoring. You know with factoring you can improve your cash flow without taking on any new debt. However, you’ve never factored an invoice before and you aren’t sure how to do it. Luckily for you, factoring an invoice is incredibly simple and shouldn’t take you much more time than a minute or two. Here is a step by step walk through of how to factor an invoice.

Request an Approval

Once you receive a purchase order, simply logon to DSA’s web site and request an approval. If it is a customer that you have factored with us before requesting an approval is very easy, all you need is their account number and the value of the purchase order. For a new account that we have not factored for you before, we just need some basic information about your customer. Just provide us with your customer’s name, address, phone number, and the amount of the order. If you have a fax, e-mail, and contact name we appreciate that as well. For existing accounts, you may receive an automatic approval directly on the web page, but if you don’t we will do our best to respond to your request within half an hour. There is no need to ask your customer to apply for credit or provide credit references, we will take care of everything for you.

Ship and Invoice

Once you have received an approval it is time to ship the merchandise to your customer and invoice them for it. We will provide you with a stamp to stamp the invoice with which states that the invoice is payable to DSA Factors. Alternatively, if you do everything electronically and don’t wish to stamp and scan invoices, you can type the wording of our stamp directly onto your invoices.

Send DSA a Copy of the Invoice and Shipping Documents

The same day that you ship and invoice your customers you can e-mail copies of the invoice along with the shipping documents (bill of lading or FedEx / UPS tracking number) to DSA. If we receive everything before our banking deadline we will process the invoices and fund you that same day. If it arrives after our banking deadline then you will be funded the following business day.

Let Us Manage Your Accounts Receivable

At this point there is nothing left for you to do.  We will manage your accounts receivable for you. That means that we will send out account statements to your customers, forward them copies of invoices upon request, and make collection calls should an account become past due.

Sign Up for Invoice Factoring with DSA

If factoring an invoice sounds simple enough, signing up with DSA Factors is just as simple. Just give us a call at 773-248-9000 and either Ben, Max, or Howard will be able to answer any questions you may have and get you signed up for accounts receivable factoring. You can start receiving funding in as little as 24 hours.

Financing a Startup Business with Accounts Receivable Factoring

Finance your startup business with accounts receivable factoringOften 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.

Another Successful Casual Market Chicago

Casual Market ChicagoLast 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 ben@dsafactors.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.

DSA Factors has been involved in the furniture industry for over 60 years and has been providing accounts receivable factoring for furniture manufacturers and importers for the last 30 years. Our clients sell everything from indoor to outdoor furniture, cushions, rugs, umbrellas, lighting, decorative accessories, and much more. In addition to accounts receivable factoring, DSA Factors also offers our clients purchase order financing so that they have the funds necessary to fulfill large orders. If you are in need of improved cash flow, or just want someone to take care of and insure your accounts receivable, choose DSA Factors, we have the experience you need to grow your business.

What are the Benefits of Accounts Receivable Factoring

Benefits of Accounts Receivable FactoringMany 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.

Online Furniture Sales are Booming

Online Furniture SalesOnline furniture sales for 2014 reached $9.7 billion, an over 14% increase from 2013’s $8.5 billion according to Furniture Today.  Leading the pack were Amazon who experienced 19.5% growth, Overstock with 14.8%, Wayfair with an amazing 44% sales growth, and Zulily with a whopping 72.% sales growth over 2013.  All four of the companies had sales volumes in the billions.  However, overall furniture sales only increased by 3% over this last year.  This online sales growth can be accredited to the fact that 8 out of 10 consumers in the US have bought furniture or bedding online in the past year.

Now it may not surprise you that most of the people buying online were young, but you might be surprised by how affluent online shoppers are.  Well over half of the households that bought bedding online this past year were under the age of 35 and make over $75,000 a year.  22% of households were under the age of 25, with 34% of them between the ages of 25 and 34.  When it comes to household income, 32% of households that bought bedding online make between $75,000 and $100,000, with 12% making between $100,000 and $150,000, and another 12% making over $150,000.  This might explain why only 59% of consumers agree that online retailers carry affordable furniture.

To further explain these numbers, 61% of online furniture consumers own their house, and 59% have a full time job.  When it comes to education, 33% of consumers hold a bachelor’s degree with another 20% holding a master’s degree or higher.

The average consumer will visit five different web sites when shopping for furniture online.  However, only 56% of shoppers will start their search online, the rest still start their furniture search in more traditional brick and mortar stores.  The main reasons why consumers are ultimately buying online is because of the large product selection available through online retailers, and online retailers provide them with design ideas.  Many of these retailers will help out consumers with design ideas by maintaining active blogs.

If you aren’t selling your merchandise to online retailers you are missing out on a lot of business.  Let DSA Factors help you by factoring your online retailer accounts.  We have lots of experience working with Amazon, Overstock, Wayfair, and Zulily, as well as with One Kings Lane, Hayneedle, Gilt, Hautelook, and many more.  Give us a call today at 773-248-9000, don’t let these sales opportunities slip away.

Furniture Orders Up 7% For First Two Months of 2015

According to a report from Furniture Today at High Point, furniture orders from factories are up 7% in January and February as compared to this same time period last year.  The cold weather this winter did have an impact on orders, however, it wasn’t as bad as it could have been.  According to the survey, 70% of manufacturers reported increases in January sales over the same month the previous year, while only 59% of manufacturers reported increases in February over the same month last year.

This is good news considering that in January and February of 2014 orders were down 2% from 2013.  That means that orders are up 5% in 2015 over 2013.  While that may not seem like a lot, it is still better than what was expected.

If your business is experiencing higher sale volumes and needs help with cash flow, factoring may be a good option for you.  While banks are still very tight with their checkbooks, factoring or accounts receivable financing can give you the money you need to keep on shipping out new orders.  At DSA Factors we have a lot of experience in the furniture industry and are familiar with most furniture stores nationwide.  We can get you approvals quickly and pay you for your invoices the day they ship.

Give DSA Factors a call at 773-248-9000 and let us handle your receivables so that you can focus on your sales.