How Accounts Receivable Factoring Functions October 12, 2009
Posted by janey in : business loans , trackbackHi, this is Phyllis Rector. Yes, you have at least 1 other video of me so far. But, I’d like to tell you an anecdote about a customer that we have, a client of ours that we helped out through factoring. So, typically, we had actually, up until recently target customers, organizations with around 250,000 in sales up to about 5 million.
The recession has opened a lot of opportunities though, and last December, we have financed a windows installer and distributor, who for the first six months, had earned up to 8 million dollars. He had contracts and orders but often, especially in the field of construction, these don’t mobilize. Bad news is, many of those contracts did not mobilize and many of his competitors went out of business. He put his show as well as building up for sale. And then all of a sudden, a general contractor came to him and asked him to install windows for commercial and residential projects.
Of course, this guy agreed. Then the time came when the buildings were ready and they’re to install the windows. His supplier, on the other hand, said that they will ship the windows Cash on Delivery. What did the guy do? Well, thank goodness, you know he called one of my colleagues who called me - so I went over and I talked to him and we’re able to structure a transaction where we could lend him money so his supplies did get shipped and his supplier was paid as agreed. Our client, the windows installer, finished the installation, billed his general contractor, took that over. After around 50 days, our customer paid us, rebated the difference between the discount and our charge, and kept him in business.
So just as a reminder, we do have some minimum requirements and they’re pretty basic. Our clients must have at least two customers, and they should be in at a minimum of a $20,000/month run rate in revenues. So if you’re in a business that’s starting to pick up after the recession, call me. It is always better to start the process sooner than later so that you’ll be ready to take on that big order as it comes. So call me, email me, whatever way, do contact me. We at the Interface Financial Group would love to try to help you out.
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