Are you looking for a business loan? Many business owners who need financing start their financing search by looking for a business loan or a business line of credit. Although business loans and lines of credit are well known products, they are very hard to get. And in reality, few business owners actually manage to get them.
In certain instances, invoice factoring may be a better and easier to obtain alternative. There are three conditions that can determine whether factoring is a better alternative than a business loan:
Are your clients‚Äô slow payments hurting you? Do they take up to 60 days to pay?
Are you turning away bigger sales because you lack working capital?
With the right financing, does your business have significant growth potential?
If you answered yes to these questions, then chances are that factoring your invoices will be better for you than more traditional business financing products. Invoice factoring provides you with financing based on your invoices, eliminating slow payment cycles and providing you with money to pay rent, meet payroll and expand your business.
Since factoring is tied to your sales potential, it does not have the arbitrary use limits that business loans have. The more your business grows, the more financing you qualify for. Period. This makes it an ideal product for businesses that have significant growth potential.
Factoring (or receivable factoring as it is also known) is easy to use. Once you have invoiced your customers you send a copy of the invoice to the factoring company. The factoring company, in turn, advances you up to 96% of your invoice and waits to be paid by your client. The factoring fee is much less than you may pay your sales representative.¬
In effect, by financing your invoices you eliminate the slow payment problem. You accelerate your cash flow, enabling you to pay your obligations, take new opportunities and grow your company.
If you own a business that is growing and you need financing, be sure to consider invoice factoring. Call DSA Factors today to see how factoring can help your business.¬
Factoring is basically invoice discounting for the purpose of speeding up cash flow. ¬†It has become a legitimate way for growing businesses to obtain loan funding without the need to provide security over physical assets of the business or personal assets such as the home.
Financial institutions are recognizing the importance of offering small to mediums size enterprises an alternative means of funding that does not include security over fixed assets. However, even though they recognize this need, it still may not be something they can handle.¬†¬† Factoring has become a major source of funding for businesses, since banks have been restructuring their service offerings to companies with limited access to funds based on accounts receivable.¬† ¬
How factoring works
Factoring is offered to companies selling to other businesses on credit terms. It is not normally available to retailers or to cash traders.
You need to receive credit approvals for your customers in advance of the funding.¬† Once you have shipped the merchandise, you bill the customer with a notification instructing them to pay the invoice directly to the factor.¬† The Factoring company does all the collection work and alleviates your need to make phone calls or send out past due notices.¬† This will allow your company to spend your efforts on growing your business instead of making collection calls.¬
How to factor your accounts receivable
Step 1 – Get the approval from DSA
Your company can call, fax,¬†email, or use our interactive easy to use website to submit accounts to DSA that you have an order from for credit¬†approval.¬† Our simple and straight forward decision making guidelines allow the vast majority of your approval requests to receive and¬†answer¬†within 30 minutes.
Step 2 – Submit Invoices and Related Documents to¬†DSA
Once your customer is ¬†approved by¬ DSA Factors
, you simply send DSA¬†your invoices and shipping documents that correspond to the shipped merchandise on the invoice(s). ¬†DSA¬†will supply you with an assignment stamp that you will place on the invoices instructing the customers to send their payments to DSA‚Äôs P.O. Box address.¬† (You also will still send the invoices to your customers with the assignment stamp on them.)
Step 3 – Get Paid for your invoices
That’s it! Now that you are set up,¬ DSA Factors
¬†will either mail, Wire or ACH the money directly into your account. ¬†We always pay you the same day we receive your invoices.
What your company can accomplish by using the services of DSA Factors
¬†will ¬†provide to you access to see your customers accounts receivable status at any time on our interactive website 24 hours a day.¬† DSA does all the collection work and processes the payments from your customers.¬† You no longer need to make collection calls.
Over the years¬ DSA Factors
¬†has built relationships with over 60,000 companies nationwide. This is why we likely have a large percentage of your customers in our data base and we have built relationships with them so that we can allow these companies a generous credit line.
So how do our collectors help you? Rest assured it‚Äôs not by yelling at your customers. It‚Äôs actually the exact opposite. Simply put, at¬ DSA Factors
¬†we treat your customers with respect just as you would treat them if you were calling them.¬† Most customers will pay their bills without too many phone calls and letters.¬† There will always be some difficult collections and of course we need to put more pressure on them to pay their bills.¬† We consider collections as a sales tool.¬† The quicker we get your customers to pay us in the allotted terms, the better chance we will have the ability to approve them for a new order.
By using the services at¬ DSA Factors
, it gives your company the chance to expand your business ¬†at any pace you want, since¬†DSA¬†can allow you to have the cash flow that you will need to grow.¬† You have no worries about whether a customer pays theirs bills and you will always know that your cash flow will be adequate to cover your expenses.
Factoring can be applied to all sorts of businesses. ¬†Today, virtually any company providing goods and services on an ongoing basis is a factoring candidate.¬ DSA Factors has many nontraditional clients that have benefited from its factoring service. Besides companies in the transportation and trucking¬†business which many of them use factoring services, we have clients in the advertising ‚Äúmedia‚ÄĚ business that use our services to improve their cash flow.¬† They buy media time at a discount and resell it to all types of companies, retailers, doctors, home builders, virtually anyone that advertises on the radio and TV.¬† Other companies we factor for are¬†talent agencies, who need to pay the talent right away while awaiting payment from their customer.¬† A few years ago, we had a start-up company that we were reluctant to get started with and they finally convinced us to give it a shot,¬†they sold office chairs to office supply companies. Soon they were selling a large office store over $100,000.00 of office chairs per month. Then the next thing they knew they landed a large multi-million dollar order with one of the large warehouse clubs.¬† The company had only modest capital, but possessed excellent contacts in the industry, coupled with lots of ambition. With the help of DSA‚Äôs service¬†and cash-flow assistance, it has grown into a substantial supplier of office furniture in the country. ¬†One of the principals of the company reminded us on many occasions that he believes factoring was the only way to fuel the company’s growth.
Certainly a company does not have to do many millions of dollars¬†worth of business to reap the benefits of factoring. Even clients with sales volume less than¬†$1 million need factoring services. At this modest sales level, the company obviously cannot afford to take a bad debt or hire internal credit, bookkeeping and collection expertise. Most importantly, the principal can direct energy to more productive areas that will help the company grow.
Factors, specifically DSA are now considered the premier receivable management entities. With numerous years of experience, extensive databases and state-of-the-art computer equipment and programs, factors like¬ DSA¬†can offer their services to a greater variety of companies in various fields of different sizes. With increasing emphasis on growth and productivity, there are constant pressures to improve gross margins and computerization. Today, it is important for a company to have the benefit of a factor to help take it into the 21st century.
Properly financing the growth of a business can be challenging.¬† It is inevitable for both new smaller companies and more established larger companies to come to a point where more working capital is required because of previous growth or to assist in new growth.¬† When business financing such as loans and credit are inadequate, when sales on credit or net terms have caused a cash flow shortage, or when new growth requires more available cash on-hand to facilitate it, additional financing is necessary to a company‚Äôs survival.¬† The solution for this financing dilemma is through Accounts Receivable Factoring with DSA Factors.
Accounts Receivable Factoring is a financing method used by many businesses.¬† In-effect it is a means of short-term borrowing using outstanding invoices or receivables as collateral.¬† This allows companies of all sizes to obtain the working capital they otherwise might not have been able to receive.
The credit line for the receivables is decided based on the financial strength of the end-customer who will owe the money on the products or services purchased, not by the seller of the receivables.
Account receivables factoring is not a loan, so there are no payments and no debt is incurred.
Any business which generates sales through open credit terms to credit-worthy accounts is eligible for this type of financing.
Each company that buys from you and would like credit terms (you must offer terms to be competitive) is submitted to DSA Factors to determine if they are eligible for financing.
The process is simple:
- A company delivers its goods or provides its services to clients and issues an invoice
- The company then sells its invoice to a factoring company such as DSA Factors, and in exchange the company is given up to 90% of the invoice‚Äôs amount in cash within 24 hours
- Then the factoring company handles the collections and gets paid for the invoice when it becomes due.¬ Certainly it is quite common that the bill is paid past the due date, and if you are working with DSA, there is no additional fee to the supplier that sold the invoice to the factor.¬
Utilizing Account Receivable Factoring with DSA Factors delivers more predictable cash flow to businesses, and since factoring receivables is directly tied to sales, as sales increase and the company grows, the receivables factoring line can quite easily grow right along with it.
Individuals looking to start a business may look to venture capital financing as a way to fund their dream. Private investors may advance funds to companies that are growing rapidly and potentially can show a profit. Of course, investors are looking for a return on their investment, whether short term or long term. ¬†This can be quite difficult for a new business to handle.¬† It is very difficult, especially in today‚Äôs economic times for companies to receive these types of infusions. For these companies, it will be necessary to find alternative funding. One really great alternative is invoice factoring
Invoice factoring can provide quick cash flow. It allows companies to get paid on newly shipped orders to their customers even when they allow their customers 30 day terms or longer in order to be competitive.¬†¬ DSA Factors
can provide funding for these invoices within 24 hours.¬† This is much simpler than attempting to secure venture capital financing. ¬†Using a factoring company eliminates the worries of having to pay back borrowed funds or pay dividends to an investor or maybe even giving up ownership to outside investors.¬†¬† Factoring is NOT a loan.¬† Factoring involves being advanced money for recently shipped goods so that the funds are available to help fulfill future orders and be current on your bills, such as payroll, utilities, inventory, and supplies.¬† Also a bonus to factoring your receivables wish¬ DSA Factors
¬†is that they do all the collection work from your customers.¬† Companies also do not have the burden of going out and securing business in order to pay back venture capitalist lenders. They are using the business they have already secured and leveraging it for much needed monies.
As a business grows so does the amount of money that they can secure through factoring. Cash advancements grow with sales volume. The more invoices they have outstanding, the more money they can receive.
Invoice factoring can also be used by new or¬†start-up¬†companies.¬† The difference between invoice factoring and venture capital financing is that companies will not have to pay money back when they use the former option. This means less stress, worry and no debt. Companies also have more control over their business because they don‚Äôt have anyone directly and monetarily invested in their company, feeling like they have the right to tell them what to do.
Venture capital financing can be a great option for companies that need a lot of money to begin a company but have no customers. However, for those companies that are newer and have already secured customers, a clear choice is invoice factoring. It allows them to get a quick infusion of cash without taking on debt from investors.
Any business that provides a product or service to other creditworthy businesses and is constrained by their day-to-day cash flow situation is an ideal candidate.
Your business can benefit by using DSA Factors if you have any of the following needs:
- Cash to cover your payroll?
- Working capital to stimulate growth?
- Help with the ability to pay ‚Äúyour‚ÄĚ bills timely?
- Help because your bank is not providing the funding you need to grow your business?
- New Equipment to Grow?
What is factoring all about?
A factoring arrangement is when a company sells its receivables to a factoring company, such as
¬ DSA Factors¬†at a discount. After the sale, the receivables balances are owned by the factoring company. Because the factor owns the receivables, it generally provides all the required credit, collection and accounting services necessary to collect the receivables, including assumption of the ultimate loss exposure from the client debtor if the account does not pay due to the financial inability to pay. It is true that a business person can attempt to retain a loan from their bank, but even if they can get a loan, the bank does not do the various functions that a factoring company does.¬† A bank doesn‚Äôt check the credit worthiness of your customer. ¬†A bank does not actually collect the accounts receivable.
¬ DSA Factors¬†does all these things.¬† The bank does not assume responsibility of invoices if the company doesn‚Äôt pay due to financial inability to pay. ¬†Let¬ DSA Factors
¬ help you acquire the capital that can grow your business.
Whether you are a start-up company or are having growing spurts,¬ DSA Factors
¬ can help your company. . We have the funding sources with virtually no limitations that understand your business cash flow needs and we are the lenders who understand your industry and want to help your business.
Non-Recourse Factoring applies to the inability of the client‚Äôs customer to pay for credit reasons.¬† For example, if a company does not pay for products or services due to financial problems, bankruptcy, out of business, these would be the factoring company‚Äôs responsibility.¬† If there are any disputes that the customer is claiming with regards to the quality of the merchandise, or shortages, etc., these issues would potentially have recourse.¬† The factoring company at that point can ask to be reimbursed for that transaction or portion of the transaction that will not be paid.¬† Some factoring companies have full recourse factoring all the time.¬ DSA Factors has non-recourse factoring for companies that sell a product.¬† When a service is involved, then recourse factoring is the norm.¬
Factoring is a cash flow tool, as well as ‚Äúinsurance‚ÄĚ on accounts that get into financial trouble, but it is not really suppose to be a method of getting rid of bad debt. The customers still belong to the company looking to factor so you can‚Äôt expect the factor to just buy a receivable and not have any recourse to the advanced funds over a disputed situation.
Non-Recourse Factoring is not simply a company selling an invoice to them and just walking away. ¬†The responsibilities of providing a good product or service still apply. Do not miss the opportunity of signing up with a better factoring company, like¬ DSA Factors
¬ ¬†because you thought you were signing up with a factoring company that claims all invoices are bought without recourse.¬† There are many factors out there that advertise only non-recourse factoring, but believe me, you will find many paragraphs in their very lengthy contract that gives the Factor the right to charge invoices back to the company.¬ DSA Factors
¬ ¬†has a very simple two page factoring agreement with no hidden fees.
DSA Factors¬†will fight very hard to get paid, even with companies that claim damages, before we give up trying to collect.¬† The Factoring Industry continues to see growth because this tremendous cash flow tool is getting the recognition it deserves for the simplicity and solutions it provides.
There‚Äôs something very important to understand when you are in business.¬† It is wonderful to grow your business with increased sales, but the most important thing is to get paid on your invoices! No matter how much you sell, if you don‚Äôt collect the money, you will not be able to survive.
Business owner are so involved in selling products and services that they forget to take the time to manage their cash flow and get paid for those sales.¬† You also need to have a plan on what it takes to collect your money. The simplest and most efficient method in improving your cash flow and handling collections is to factor your accounts receivable.¬
Factoring your receivables allows you to sell your receivables and get cash now instead of waiting 30 or 60 days. ¬†Of course there‚Äôs a fee for using a factoring service, but you will be able to offset that fee by potential savings you can incur when negotiating discounts from your suppliers.¬† If you have the cash available, you may be able to attain a discount for paying your vendors quickly.¬† Your net cost of factoring can be reduced to nothing.
Regardless, a¬† huge benefit to using a factoring company, especially DSA Factors, is that you do not have to subscribe to expensive credit rating bureaus to check out the credit worthiness of your current and potential customers.¬† Another benefit is that you don‚Äôt have to call your customers for payments.¬† You can concentrate on calling on the customers to increase your sales, and the factoring company can do all the dirty work in collecting payments for past invoices.¬† If the customer goes bad, and doesn‚Äôt pay,¬† the factoring company normally holds that responsibility.¬† So besides getting the up front cash flow you need, you will also be able to have assurance that you won‚Äôt get stuck with unpaid invoices.¬
Remember, your cash flow is not the same as your profits. You can have a profitable business, but a negative cash flow due to retaining accounts receivable. Factoring can give you the positive cash flow you need to make your business even more profitable.
Call Howard at DSA Factors at 773-248-9000 if you would like to learn more about how factoring can help your company.¬† Or you can shoot an email to firstname.lastname@example.org.¬†¬