Factoring 101 Blog - Acounts Receivable Factoring and Other Industry News

The Factoring 101 Blog is your one stop destination for all things factoring related. With well over 100 posts dating back to 2011, if you have a question about accounts receivable factoring, purchase order financing, fintech, managing accounts receivable, or anything else, chances are you will find an answer to your question right here on the Factoring 101 Blog. If there is something that you can't find the answer to, or you want more information about it, please feel free to give DSA Factors a call at 773-248-9000 as we are always happy to help you with any questions you may have.

Finding the Lowest Factoring Rate

July 5, 2016

How to Find the Lowest Rate for Accounts Receivable Factoring
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...
Avoid The Pitfalls of Online Lending

Avoid The Pitfalls of Online Lending
Online lending, often referred to as Fintech, is becoming increasingly popular and is a major disruptor in the world of finance...
January 8, 2019

Purchase Order Financing vs Accounts Receivable Factoring

Purchase Order Financing vs Accounts Receivable Factoring
There are many different financing options available to businesses that could use improved cash flow...
May 3, 2017

Finance in the High Tech World

Factoring vs Fintech: Finance in the High Tech World
For most small business owners, obtaining a line of credit from a bank has never been easy...
December 30, 2016

What To Look For in a Factoring Company

December 31, 2018

What To Look For in a Factoring Company
Every accounts receivable factoring company is different, it is important to know the questions you need to ask when looking for the correct factor for your business...
Accounts Receivable Factoring Services

Accounts Receivable Factoring Services
Cash flow is typically the main concern for any company that is looking for accounts receivable factoring...
June 19, 2017

Micro Factoring - Funding Your Small Business

Micro Factoring for Your Small Business
Micro factoring is just like normal accounts receivable factoring, only it is on a smaller scale...
February 7, 2017

fixed rate vs adjustable rate accounts receivable factoring

Fixed Rate vs Adjustable Rate Accounts Receivable Factoring
There are two different types of rates that most factoring companies quote potential clients these days, fixed rate (or flat rate) and adjustable rate...
January 4, 2017

Purchase Order Financing vs Accounts Receivable Factoring

May 3, 2017

Purchase Order Financing vs Accounts Receivable Factoring
PO financing and factoring are considered alternative financing options, as the process is much faster and easier to obtain than a traditional SBA loan from a bank...
Purchase Order Financing and Accounts Receivable Factoring can work together to fund your business.

Factoring and PO Financing: Working Together to Fund Your Business
There are many different ways to fund your business out there, but choosing the correct funding method for your business can sometimes be difficult...
December 4, 2019

Accounts Receivable Factoring vs Fintech

September 1, 2016

Traditional Factoring vs Fintech
There has been a lot of talk about fintech lately. However, factoring has always been an alternative financing method, and has a long track record of success...
Fintech: Balancing Speed and Availability with Service and Privacy

Fintech: Balancing Speed and Availability with Service and Privacy
Fintech is becoming increasingly popular each year. The success of Fintech is primarily driven by the ease and speed of getting access to funding...
January 15, 2020

Accounts Receivable Factoring vs Supply Chain Financing

Accounts Receivable Factoring vs Supply Chain Finance
With each passing day it seems like a new technology is disrupting a traditional business model...
May 2, 2018

Accounts Receivable Factoring in many ways predates Fintech in the field of financial technology.

How Accounts Receivable Factoring Fits Into the Fintech World
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...
May 9, 2017

A Guide to Net Payment Terms

December 18, 2019

A Guide to Net Payment Terms
Net payment terms are when you offer your customers a fixed amount of time to pay you back. Net 30 day terms are the most commonly used payment terms...
Having a good collections process is key to turning your receivables into cash, but that doesn't mean that you need to be doing the collecting.

Collections: Turning Your A/R Into Cash
You've developed a product or service that everyone loves. You've marketed it. You've sold it. Now all you need to do is get paid for it...
December 9, 2019

Nothing is worse than when you sell a product to your customer and then they don't pay you for it. The solution to this problem is to acquire credit insurance.

A Guide to Credit Insurance
For any business owner, there is nothing worse than when you sell a product to your customer and then they don't pay you for it...
January 7, 2020

Just like personal credit for consumers, businesses also have credit that can be used to determine their ability to pay for merchandise and services.

Performing Due Diligence: Credit Checking a Business
In the same way that we have personal credit that determines our ability to make purchases, businesses also have credit that can be used to determine their ability to pay for merchandise and services...
December 31, 2020

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21 Ways That Accounts Receivable Factoring Can Help Grow Your Business

Accounts receivable factoring has been around for centuries, but in no way does that mean that it is an antiquated from of financing. Of course, a lot has changed since the days when invoices were etched in stone, and factoring companies have evolved as well. The reason why factoring has been around for so long and still remains a popular form of financing is because it has always been one of the best and most accessible options to growing businesses. Why should you consider accounts receivable factoring? Below are just 21 of the benefits of using accounts receivable factoring to grow your business.

  • Improved Cash Flow
  • The primary benefit of factoring is getting funded for your receivables the same day you invoice your customer, rather than having to wait 30 days or longer to get paid. Having healthy cash flow is crucial for any business, and it was what factoring is all about.

  • No New Debt
  • Accounts receivable factoring is a completely debt free form of financing. Rather than giving you a loan with receivables used as collateral, your factoring company is actually purchasing your receivables. You don’t need to worry about having to pay your factoring company back.

  • Fast, Reliable Funding
  • Speed and consistency is what factoring is all about. Typically factoring companies will fund you the very same day that you send invoices over to them. In many cases, with a simple email or call, they may even be willing to extend their deadlines for you if you need a little bit of extra time to get everything put together, or are waiting for a truck to arrive.

  • Quick Credit Decisions
  • Unlike banks that can take months to make a credit decision, factoring companies move quickly. It is quite possible to get setup with a factoring company within 24 hours and receive your first funding within 48 hours. Factoring companies also make speedy credit decisions on your customers, oftentimes approving orders in 30 minutes or less. In many cases, you might even get an instant approval on your factoring company’s web portal.

  • Credit Based on Your Customers’ Good Credit
  • There is no need to worry about whether or not you will be approved for factoring. Your factor is extending credit to your customers, not to you. As a result, credit decisions are based on your customers’ ability to pay, not your own.

  • Take on Larger Orders
  • Orders that may have been too large to take on in the past, are easily manageable with factoring. You don’t need to worry about having all of your money tied up in receivables, and you don’t need to worry about what would happen if your customer is unable to pay on time or at all.

  • Purchase Order Financing
  • Some factoring companies also offer purchase order financing. This means that they will give you a loan to pay your suppliers in the event that you receive a large purchase order. This is a great tool for any business that is getting into a major retailer for the first time, is simply expanding, or for businesses that are seasonal.

  • Eliminate Need for Credit Checking
  • Your factor will handle all of the credit checking for you. That means you no longer need to ask new customers for credit references, or subscribe to expensive credit reporting agencies. You also don’t need to continually monitor your existing customers, as this is all handled by your factoring company.

  • Outsource Collections
  • By factoring your receivables, you are also outsourcing your collections to professional and courteous collectors. You no longer need to have employees dedicated to collecting, or take away time from important tasks to make collection calls. Instead, when you call customers, your focus can be on making sales.

  • Better Leverage in Collecting
  • Your factoring company works with many other clients in your industry who sell to the same accounts as you. If an account does not pay a factor, it not only holds up their ability to receive more merchandise from you, but also from several other of their vendors. It is also known that factoring companies report both prompt payments and delinquencies to credit agencies, so how they pay a factor has a very large impact on their credit.

  • Credit Insurance
  • If your factoring company offers non-recourse factoring, your receivables are fully insured against non-payment. You no longer need to worry about a customer who is unable to pay for merchandise. Furthermore, you don’t need to worry about paying annual premiums, deductibles, and reaching minimums, every invoice you factor is fully insured.

  • Improve Your Credit
  • While factoring does not directly impact your business’s credit, the improved cash flow it offers you allows you to take care of bills faster, and this of course is directly reflected on your credit report.

  • No Credit Limits
  • There is no limit to how much you can factor, factoring is the only form of financing that grows as your business grows. Where bank look at what you did in the past, factoring companies look at what you are doing now, and what you can do in the future. The more sales you have, the more funding that is available to you. Factoring companies are also happy to work with seasonal businesses that experience most of the sales volume in a short two to three month period.

  • Flexible Financing
  • Some factoring companies are very flexible in how they finance your business. They may allow you to choose which accounts you wish to factor to help you minimize how much you need to pay in factoring fees.

  • Only Pay For What You Factor
  • Unlike a line of credit from a bank that comes with fees whether or not you draw on it, you only ever pay a factoring fee when you factor an invoice. If you wish to keep an account in house, or have a customer who prefers to pay with a credit card, then you are not charged any factoring fees on them.

  • Spend Money as You See Fit
  • With factoring you are simply being paid for your receivables, unlike a bank who may providing you with a loan for a certain purpose and requesting financial statements. As a result, with factoring the funds you receive are yours and they can be used in any way you wish.

  • Easy Online Access to Reports
  • Most factoring companies offer online portals that offer a variety of real-time reports. These reports can be used to assist in sales or accounting. Factoring companies are also willing to put together additional reports that you may need from time to time, usually at no additional charge.

  • No One is Too Small or Too Big
  • Regardless of how much business you do, factoring will always fit your business. From companies that only do $50,000 a year to companies that do $5,000,000 a year or more, factoring will provide you with the financing you need. Likewise, no order is too small or too big, whether you are selling $100 to a mom and pop store, or $1,000,000 to a national retailer, you can always factor the resulting receivable.

  • Factoring Works With Startups
  • While most financing options aren’t available to startups or younger, growing companies, factoring is available. Even if your company has been around for less than a year and hasn’t established any credit yet, you still can qualify for factoring.

  • Develop Long-Term Business Relationships
  • Factoring is all about relationships. Your factoring company will always take the time to speak with you and work with you to help you grow your business. Some factoring companies are even family-owned small businesses themselves, so they understand many of the struggles that you need to deal with, and you will work directly with the principals.

  • Factoring Companies Want You To Succeed
  • Your factoring company’s success is directly related to your success. Since a factoring company only gets paid when you factor an invoice, your business’s success is at the heart of every decision a factoring company makes.

If accounts receivable factoring sounds like it may be the financing option your business is looking for, give DSA Factors a call today at 773-248-9000 or email us at info@dsafactors.com. We are a family owned business that has been providing accounts receivable factoring and purchase order financing for over 35 years. So what are you waiting for, give us a call today and start growing your business tomorrow!

Performing Due Diligence: Credit Checking a Business

Performing Due Diligence: Credit Checking a Business

December 31, 2020

Everyone is familiar with credit scores and credit reports. How good your credit score is determines whether or not you will qualify for a mortgage, a car loan, or even a credit card. This of course makes sense, as banks don’t want to give away money to people who will be unable to pay them back. However, in the same way that we have personal credit that determines our ability to make purchases, businesses also have credit that can be used to determine their ability to pay for merchandise and services. Unfortunately, business credit isn’t as clear cut as personal credit. For one, there is no universally used credit score out of 850 like there is for individuals. There also aren’t three major credit bureaus that serve up the same data, but a large number of credit reporting agencies that all specialize in different fields and provide different types of reports with different data points. Finding the right credit agency or credit agencies to meet your needs not only is a difficult task, but can become prohibitively expensive. However, not offering businesses credit when they request it can result in lost sales...

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Making the Leap from B2C to B2B

Making the Leap from B2C to B2B

December 29, 2020

When bringing a new product onto the market, it is very common for a business to initially sell directly to consumers as they are trying to get the product established. This may be done through their web site, or if they own a retail store, they may even sell it in their store. Some businesses may even invest in becoming third party sellers on Amazon Marketplace, Etsy, or other online marketplaces. However, if a company truly wants to expand their reach and start selling their product in larger quantities, the key to doing this is to make the change from strictly B2C (business-to-consumer) and start selling B2B (business-to-business). This can be a daunting task, and finding customers who are willing to sell your product is never easy. Should you succeed in finding customers, you now need to ramp up production of your product, and that of course requires funds that you may not have access to...

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The True Economic Cost of the COVID-19 Pandemic: Credit Insurance and Supply Chain Finance

The True Economic Cost of the COVID-19 Pandemic: Credit Insurance and Supply Chain Finance

December 15, 2020

It was over a year ago that the coronavirus was first detected, and while the disease didn't bring drastic change to America until March, that first wave is now long behind us and things have only gotten worse since the summer months. But beyond the disease which has infected millions and taken many lives, the pandemic has also been devastating to our economy. While the most visible effect of the pandemic has been bankruptcies and empty store fronts, the economic effects of the pandemic actually go much deeper than that. Prior to the bankruptcies and store closures we saw a tightening of credit insurance policies combined with an unwillingness for the industry to take on new clients. The pandemic has also led to the disappearance of supply chain financing, which had grown tremendously over the past decade, while at the same time payment terms got extended. In other words, while consumers may only see the disappearance of their favorite stores and restaurants, behind the scenes the vendors who provide stores with their merchandise have not only seen reduced business, but a lack of financing available to them...

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