Here we answer the most common questions and concerns about Summar and factoring.
1. About Summar
What is Summar?
Summar Financial, founded in 2004, is a leader in factoring and supply chain finance solutions for fast-growing companies. Whether through our General division or our Freight Factoring division, our working capital solutions give business owners peace of mind knowing that they can count on Summar to fund their growth. Summar has worked with over 5,000 companies, funding over $3 billion in working capital with personalized customer service and excellent customer satisfaction.
How does Summar work?
Working with Summar is easy. First, apply online or via email, providing basic information about your business. We will check your buyer´s/supplier’s credit, and once approved, you can upload the invoices and POs. We will deposit the corresponding funds in a few hours.
What are the benefits of choosing Summar?
We pride ourselves on having the best service in the industry. We also fund our clients in a matter of hours, and we offer them non-recourse programs with a credit guarantee. We focus on the Latin-American market and better understand their culture, needs, and expectations.
With what industries does Summar work?
Summar helps businesses in a wide variety of industries. These include, but are not limited to, Freight, Food, Manufacturing, Retail, and Service sectors.
What is factoring?
Factoring is a financial solution that allows you to gain the cash flow you need to continue your everyday operations and focus on the growth of your business. This flexibility is obtained by selling your invoices to us. Learn more about factoring here.
Is invoice factoring the same as getting a loan?
No. Summar gives you an advance on the invoice amount, and then on the invoice due date, your customer will simply pay the amount due to Summar instead of sending it to you. You take on no debt or liability.
My company has an existing line of credit or loan. Can I still factor my receivables?
Banks and finance companies typically file a lien on your company’s accounts receivable and assets, and may or may not approve your company to work with a factoring company. We must know of any financing arrangements you have up front to address the right financing structure and work with your financing institution to obtain the necessary releases and or approvals from them. We work with numerous banking institutions that use our programs as a solution to improve their clients’ financial condition.
What kinds of companies use factoring?
Companies that get the most out of factoring are those that are growing in sales and whose customers ask for payment terms. If your company has a product or service that sells with payment terms, there is no tool better for you than using factoring. Factoring can be used by almost any company that gives payment terms instead of receiving immediate cash for the products it sells. Companies use factoring to supply the money needed to expand operations or maintain a current level of production without sacrificing other areas of the business.
Does factoring increase my debt and liabilities?
No. Factoring is a service that is accounted for as an operating expense instead of a debt. Entering into a factoring agreement will not hurt your credit history or increase liabilities on the balance sheet of your company.
Will factoring affect my relationship with my customers?
No. You will continue doing business with your customers as usual. The only thing that will change is that all checks for the invoices Summar has purchased will go directly to Summar Financial instead of going to your company. We will notify your customers that you have hired Summar Financial as a financial servicing company and that checks should be payable to Summar Financial instead of your company. Other than that, nothing will change.
Does factoring affect how my customers perceive my business?
In our experience, having factoring is seen positively by customers if you are associated with a reputable factoring company. The reason is that your customers will know that you have the cash needed to grow as much as you want and continue to provide payment terms to them. It’s a win-win scenario in which your customers continue to get their required payment terms, you continue selling, and we service and maintain your terms in the commercial relationship with your customer.
Will my customers see me as financially weak if I factor my company?
This is a common misconception for many companies that are new to factoring. Factoring is one of the oldest financing programs and is very common in today’s marketplace. It’s used by many corporations of all sizes as a cash flow solution. In fact, your customer may already be sending payments to us from invoices from another vendor.
3. Our services
How much funding will I get?
Depending on the financial service, Summar offers funding to up to $5,000,000. Your factoring facility will be determined based on a review of your business and buyers.
Are there termination fees if I want to leave?
We offer different programs, with and without minimum stay terms. Depending on the plan you choose, you might have to pay early termination charges. We make these clear to both parties before you sign on.
How often can I get funded by Summar?
You can request advances for as many invoices as you like and as often as you like, within your available factoring facility.
How quickly do I receive the funds?
As quickly as in a few hours once approved and confirmed. Keep in mind the first invoice from every client typically takes 24-48 hours to fund after all the documentation is received, as the factoring company has to get set up with your client to accept payments on your behalf.
If the bank has denied me a loan, can I still get funded by Summar?
Yes. Our decision process is different because we focus on the creditworthiness of your clients.
Am I required to factor all my company’s invoices?
No. You have the freedom to select the invoices you wish to factor depending on your cash flow needs. However, because each client you factor is formally notified with instructions to remit all payments to the factoring company, all payments must be received by them to avoid confusion. You will only incur fees on the receivables factored, and all payments are immediately redirected back to you when received by us.
How much will I receive in advance for my account receivables?
Advance rates can range between 80-90% of your accounts receivable depending on your industry, your company’s specific situation, and the frequency with which you will require factoring.
What if my customer does not pay any third parties?
This scenario happens from time to time with some of our clients. After we do our best to educate and convince your client of the value of this service, we will, as a last resort, try to establish a non-notification relationship that will allow us to work silently to your client. We will open a lockbox account under your name so that payments get sent into that account, which in turn will be redirected to us by the bank. This type of arrangement is typically determined by the factoring company and works on a case-by-case basis.
Which customers should I factor?
While you have the freedom to select the customers you wish to factor, we recommend that you focus on your best-paying customers demanding payment terms. Invoice factoring is a financial tool to accelerate cash flow and not a way to offload your bad-paying customers.
What happens if my customer does not pay the invoice factored?
There must be a particular reason why your customer will not pay for an invoice. In commercial disputes, you as a vendor will have to respond, however, if your client goes bankrupt or becomes insolvent. We typically credit insure your receivables, which means our credit insurance would cover that loss.
How much does Summar charge for its services?
Fees vary depending on the creditworthiness of your customers, the invoice value, and the duration of the invoice terms. Summar´s average fees range from 1% to 3% over the face amount of your invoice.
Can I continue doing my own accounts receivable?
Yes, your company can continue performing accounts receivable maintenance duties on all your accounts, even if you are doing factoring. Just remember that all payments on your invoices go directly to your factoring company.
What happens if my customer does not pay an invoice?
Depending on your factoring company, you could have a non-recourse or a full recourse factoring contract. On a non-recourse factoring contract, the risk and potential loss of a customer defaulting on payment of an invoice typically rely on the factoring company. On full recourse factoring contracts, your company would be responsible for any default or non-payment risk.
How is qualification determined?
You can benefit from our freight factoring program if you work with creditworthy clients and brokers. That´s it. We work with a broad range of clients, and we will not check your credit. If you are interested in our other factoring services and you are a B2B company with more than one year in business and +$100,000 monthly revenue are eligible to apply. To apply to supply chain finance, you should have annual revenues of +$7M.
How do I know if my customer is reputable?
We do it for you as part of our factoring service to you. We will check the creditworthiness of your customers and will give you a credit limit for each of them. Better yet, we will purchase your receivables up to the credit limit that we establish for them.
Do I need invoicing or accounting software to use Summar services?
No. You can use Summar services even if you don’t use invoicing or accounting software.
5. How do I start the process?
The first thing to do is to fill out the online application or call us directly. One of our representatives will get the process going. The whole process should not take more than 48 hours from us receiving your application to being able to purchase your invoices.
Want to learn more about us?
Send us your contact information, and we’ll get in touch with you in one business day or less.