How Accounts Receivable Factoring Assists Small Business October 15, 2009
Posted by janey in : business loans , trackbackHello I am Phyllis Rector and I would like to tell you an anecdote about a business owner that we have assisted. At Interface Financial Group, we quickly get people funded - that’s something that we are really proud of. Here in Arizona, I am dealing with a staffing organization. He actually staffs electricians to electrical contractors. Even if he doesn’t work under a sub-contract agreement, he is still considered as being in the construction industry.
This guy had been making 8 million dollars but in 2008, just like the rest of the construction industry, his business fell off. So, I spoke with him. He liked our service. He is particularly happy about the use-it-as-you-need-it feature of our service. No minimums as well as maximums - not even time commitments.
However, he is adamant on the idea of having to tell his customers that they were to sign on our notification of sale and consequently have to pay us directly. For him, this is like saying that he is in deep financial debt.
Well, to the unfamiliar, let me say that accounts receivable factoring has been here for around 4000 years already. it’s not a new concept in financing - and businesses with a larger customer base may be more familiar with factoring. So, let me just tell you. Boeing, you know the airplane manufacturer, their suppliers factor their invoices and how do I know, because one of their suppliers came to us for a spot factoring for a really big order.
This guy contacted me on a Wednesday afternoon, because he does weekly payroll on a Friday. So, I went out to meet him on Thursday morning; we got the paper work done. I got his notification signed and I was able to wire him money by 1pm of Friday so that he could make his payroll and since we wire money, it’s good as the same day and he was really pleased. Waited about 45 days, got paid, rebated him back the difference between the discount and our charges. So, I do want to remind you that we do have a few minimum requirements.
We have no minimums as far as the size of the invoice that you sell us but we do have minimums on the size of the companies that we will finance. As far as revenues are concerned, you must be at a $20,000 month run rate. At the very least, you need to have 2 customers; now, please do contact me if you start growing out of this recession and are seeing your business pick up.
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