Who Can Benefit From Using DSA Factors

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.

The Bank Alternative Especially Since Banks Aren’t Lending

 

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’s survival.  The solution for this financing dilemma is through Accounts Receivable Factoring with DSA Factors.
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Accounts Receivable Factoring is Really Very Simple
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.
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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.
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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.
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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.
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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.

 

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.
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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 ‚Äúyour‚ÄĚ 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.
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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‚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.¬
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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.
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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.
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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.

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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
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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.
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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.¬
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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.
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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.