Invoice Factoring: An Alternative to Venture Capital Financing

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’s 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’t 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.
For more information please contact DSA Factors today at 773-248-9000 or info@dsafactors.com.

Are you an ideal Candidate for Factoring?

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:

  1. Cash to cover your payroll?
  2. Working capital to stimulate growth?
  3. Help with the ability to pay “your” bills timely?
  4. Help because your bank is not providing the funding you need to grow your business?
  5. 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’t 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’t 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.

Recourse vs. Non-Recourse Factoring

Many business owners may not understand what Non-Recourse Factoring vs. Recourse Factoring really is.

Non-Recourse Factoring applies to the inability of the client’s 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’s 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 “insurance” 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’t 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.

Factoring is the Answer to Improve Your Cash Flow!

There’s 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’t 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’s 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’t 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’t 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’t 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 howard@dsafactors.com

DSA Factors is Ready to Help a Rebounding American Furniture Industry

According to the Boston Consulting Group (BCG) recent report titled “Made in America, Again: Why Manufacturing Will Return to the U.S.”, we can expect to start seeing furniture manufacturing returning to the United States.  In fact BCG believes that furniture is just one of seven “tipping-point” industries that will start moving manufacturing jobs from China back to the US.  The list of industries includes the automotive, electrical equipment and appliances, furniture, plastics and rubber, machinery, fabricated metal products, and the computer and electronics industries.  These industries account for approximately $2 trillion in sales annually and account for 70% of all Chinese imports.  Additionally this can lead to the creation of 2 to 3 million jobs in the United States.

According to BCG, Chinese wages have been rising at 15-20% per year, while the Yuan RMB has been appreciating against the US Dollar.  The once enormous labor gap cost will shrink to less than 40% by 2015.  As a result the industries mentioned above which have a relatively low labor cost, compared to high costs of shipping, materials, security, delivery responsiveness, and quality control, will begin to move manufacturing of products back to the US for sales throughout the Americas and Europe.  The Chinese will not be closing their factories as they will still have a competitive advantage in Asian markets, but their competitive advantage will disappear in North America and most likely in Europe as well.

BCG does mention that Mexico will still have a much lower labor cost than either China or the US, and some manufacturing jobs will almost certainly go to Mexico.  However the vast majority of manufacturing should be coming back to the US due to our larger skilled workforce and for logistical and security reasons in these tipping-point industries.  The clothing and textile industries, however, most likely won’t be returning due to their high percentage of labor costs which will allow the Chinese to keep their competitive advantage.

These changes are already becoming apparent.  From 2001 to 2004 Chinese imports grew by about 20% per year.  However, there have been dramatic decreases in recent years with imports flattening out and even declining in 2009, not just for Chinese imports but for imports from all low-cost nations.

At DSA Factors we are proud to support the American manufacturing industry and are ready to help out anyone, big or small, who is bringing manufacturing back to the US.  We are located in Chicago and have been serving the furniture, bedding, giftware, housewares, trucking, staffing, and many other industries since 1986.  We have helped many companies to grow over the years and will work with you to grow your business.

Using Factoring to Survive the Cash Flow Crunch

Companies facing a cash flow squeeze have the option of selling their invoices or accounts receivable to factoring companies as a quick and reliable way of receiving the funds necessary to run their business.  The way a factor works is they check the credit-worthiness of your customers and assuming they have good credit will purchase your accounts receivable for that customer at a small discount.  As a result you will receive immediate cash instead of waiting for 30 or 60 days to collect.

At DSA Factors we can offer to pay you up to 96% for your invoices, and you can receive that money the very same day with a wire transfer or the next day via an ACH.

Many businesses use factors when they are first starting out because they may not have established a long enough credit history to get a loan from a bank, while a factoring company is more concerned with the credit-worthiness of their customers.  However many older, well established companies also use factoring because of the many advantages it offers.  Not only is it much easier to work with a factoring company than get a loan from a bank, but the factoring company also provides valuable services such as doing all of your collections and even insuring your receivables.  Additionally a factoring company is more willing to work with you than a bank as their success is directly tied to your own success.  At DSA Factors you will always be able to talk with one of our principals as well as be able to access a variety of information about your accounts 24/7 from our online tools.

Factoring can work for pretty much any industry, and some industries are almost entirely reliant on factors to meet their cash flow needs.  At DSA Factors we specialize in factoring for the furniture, trucking, and staffing industries.  However we have a wide range of clients that sell everything from office supplies to clothing as well, and we are able to work with any industry to meet their financing needs.  We can also work with any size account, whether you are selling tens of thousands of dollars worth of merchandise to a Target or Sam’s Club, or just a few hundred dollars worth to mom and pop stores.

Why choose Accounts Receivable Financing (Factoring) over a bank loan?

Accounts receivable financing, or factoring, is an excellent alternative to traditional bank loans and is becoming a more and more popular way of raising funding to help your business grow.  Factoring is something that can be used by pretty much any industry, from manufacturing to trucking to staffing and many more.

Factoring is a fast and simple way of raising money without having to go through any hassles.  When you apply for a bank loan it is a long drawn out process that requires many forms, personal guarantees, lien assets, and they will ask you what you plan to do with the money from the loan.  Then, should the bank decide to give you a loan, they also give you an inflexible payment schedule as well as a potentially high interest rate.

However, with factoring invoices, you submit your credit-worthy invoices and can receive immediate payment for them the very same day you submitted them.  Furthermore this money is yours and does not need to be paid back so long as there are no problems with the merchandise or service provided.  You can spend the money any way you want, whether its for payroll, raw materials, paying off creditors, advertising, expanding your business, or anything else.  You also don’t need to put up any collateral, you are selling your invoices to the factoring company so there is no need for a lien on any of your other assets.

But getting instant cash for your receivables doesn’t just improve your cash flow and provide you with needed money, it also eliminates the need for credit checks and collections.  Before you sell your product to a potential customer you submit it to the factoring company for approval.  It is the responsibility of the factoring company to run credit checks and make sure that the customer is credit worthy.  At DSA Factors we work our hardest to approve accounts submitted to us, while other factoring companies may look for reasons to turn down accounts, we look for reasons to approve them.

The factoring company will also do all the collection work for you as well.  When you factor your accounts receivables you are selling your invoices to the factoring company, it is now their responsibility to collect from the customers.  At DSA we know that your customers are very important to you so we make sure to always treat them with respect so that you can establish long and profitable relationships with all your customers.

Factoring your accounts receivable can be a very effective way of raising capital quickly and hassle free for both large and small companies.  If you have accounts receivable then factoring can work for you.  Feel free to call DSA Factors at 773-248-9000 or visit our web page at www.dsafactors.com.

How does factoring insure my receivables?

Factoring isn’t just a way of improving your cash flow and eliminating the need for collections, it also acts as a form of insurance for your receivables.  At DSA Factors we offer Non-Recourse factoring.  We offer immediate payment for your receivables and that money is yours.  That means that even if an account doesn’t pay, you still keep the money we gave you for your invoice so long as there are no merchandise disputes.

How do we do this?  Well its simple, before an order is placed you need to get an approval for the account.  This means that we check the accounts credit ratings and payment history to make sure that they are an honest company and pay their bills.  You will no longer need to look up credit ratings or even subscribe to credit agencies or check credit references before selling your products to someone.

DSA offers online automatic approvals to our clients, all you need to do is login to our web site and enter the account and order information.  Most accounts are automatically approved and you will receive an instant notification that the account has been approved.  With accounts that we can not automatically approve, we will review the accounts at our office and get an answer to you within 24 hours.  When we receive a request for credit we don’t look for reasons to turn down the account, but rather we look for reasons why we should approve the account.  So even if we can’t automatically approve an account, most likely we will be able to approve it still.

Unlike other factoring companies, when DSA extends a line of credit to one of your accounts, you don’t need to share that line of credit with other clients of ours which may sell to that account as well.  So you will not be turned down because we are already factoring invoices on that account with another client.  Each account gets a separate line of credit with each one of our clients.

Money To Make Your Company Grow

From time to time, both large and small businesses have a problem with cash flow.  This shortage in cash may be due to seasonal requirements, rapid expansion, product development, or any number of other circumstances.  The remedy most business owners and managers consider first is bank financing.  Many times, however, businesses are ineligible because they have used their entire line of credit, or they need to avoid long-term monthly payments.

DSA Factors offers a solution to this cash shortage through factoring. Factoring is the purchase of accounts receivable on a discount basis.  In effect, DSA Factors is a secondary financial market that helps businesses through the cash flow crunches that can occur when they have to wait for payment on their invoices.  Companies with creditworthy customers can factor their invoices and receive cash in as little as 24 hours, with no minimum or maximum contracts.  In fact, we currently have clients that factor invoices for less than $200 as well as clients that factor invoices for many thousands of dollars.

To see how your business can benefit from our professional services, contact Howard Tolsky at DSA Factors, 773-248-9000, today for additional information.  Or visit our web site at www.dsafactors.com.

What can factoring do for you?

If you try our factoring service, the benefits you will receive are as follows:
  • You will get INSTANT cash for your accounts receivable (24 hours MAX!)
  • You can offer your customers 30 or 60 or 90 day terms!
  • You will eliminate all work associated with collecting money from your customers.
  • You will spend more time doing what is “KEY” to your business, which is increasing your SALES!!
  • You will have the cash necessary to pay your bills more promptly like payroll, inventory, and office expenses.
  • You most certainly will expand your business by having the ability to handle larger orders.
Why use DSA instead of CIT or GE or any of the other factoring companies?
  • You will be able to talk to the principals at DSA any time you need to, in other words you will get real CUSTOMER SERVICE.
  • You will receive approvals for your orders normally within 1 hour!
  • You will receive a much higher APPROVAL rate on your requests (we look for reasons to APPROVE your accounts, not reasons to turn them down).
  • You will receive a very competitive factoring rate for your receivables.
  • You are not required to sign any LONG TERM or SHORT TERM contract.
  • You won’t pay any minimum monthly or annual factoring fees.
  • You don’t need a Philadelphia lawyer to comb through the typical 37 page factoring agreement. (Ours is a total of TWO pages).
In a nutshell, here are SEVEN benefits you will receive from us when you are factoring your receivables:
  1. You are paid on your receivables 96.1% up to 98.1% of their value.
  2. You don’t  make collection calls anymore. You will be assured that we, DSA will treat all of your customers with respect and care just as you would.
  3. You and DSA will work together with “as a team” in handling your customers. 
  4. You can eliminate quoting your customers terms of COD or PREPAY or CREDIT CARD.
  5. Your customers will place larger orders knowing that you will be giving them open credit terms.
  6. You will have access to our interactive website 24 hours a day where you can request approvals, check to see if your accounts have paid, look back at all  transactions between us, and lots more!
  7. You don’t stay up nights wondering when your customers will pay you!
If factoring sounds like something you can use visit our web page at www.dsafactors.com or call us at 773-248-9000.
P.S. You can just TRY our service on an invoice or 2 to see how it works. No long term obligations.
P.P.S. You will be able to pay all your bills timely and maybe even get discounts if  you prepay some of your bills. If that is the case, our service can be FREE to you.
P.P.P.S.  Our program is non-recourse, which means if we approve an account and they don’t pay because of their inability to pay (bankrupt, financial problems, etc.), you will not have to incur the loss.

NOW would be a great time for you to
TURN YOUR RECEIVABLES INTO CASH!!!