It’s a partnership mentality that allows you to keep running your business exactly as you like and with the financial support every fast-growing company needs to stay ahead of the competition.
Frequently Asked Questions
No. when you factor your company’s accounts receivable 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 factor, all payments must be received by the factoring company. This ensures your client sends all payments to one party to avoid confusions. You will only incur fees on the receivables factored, and all payments are immediately re-directed back to you when received by us.
Advance rates can range between 80-90% of your accounts receivable depending on your industry and your company’s specific situation and the frequency in which you will require factoring.
Funding typically happens immediately after the invoice is verified with your client, to ensure the product has been received or the service has been rendered, and a confirmation that payment will be remitted to the factoring company. 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.
This scenario happens from time to time with some of our clients. After we drain our resources notifying the client and fail in the process, we will try to establish a non-notification relationship that will allow us to work silently to your client. This means that 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.
While you have the freedom to select the customers you wish to factor, it is recommended that you focus on your best-paying customers who demand payment terms as invoice factoring is more of a financial tool to accelerate cash-flow and not to offload your bad-paying customers.
Banks and Finance Companies typically file a lien on your company’s Account Receivable and assets and may or may not approve your company to work with a factoring company depending on the financing you have with the existing financial institution. In this scenario, it is important that we know of any financing arrangements you have up front, in order to address the right financing structure and work with your financing institution in order to obtain the necessary releases and or approvals from them. In the event the financing institution does not allow you to work with a factoring company, you may have to consider paying off the current financing in order to factor your accounts receivable. We work with numerous banking institutions who use our programs as a solution to improve their client’s financial condition.
This is a common misconception for many companies who are new to factoring. Factoring is one of the oldest financing programs and is very common in today’s marketplace and used by many corporations of all sizes as a cash-flow solution. You customer may already be sending payments to us from invoices from another vendor.
There must be a very specific reason as to why your customer will not pay for an invoice. In situations of commercial disputes, you as a vendor will have to respond to that dispute, however, in the event your client becomes bankrupt or insolvent, we typically credit insure your receivables, which our credit insurance would cover that loss if it were the case.
Banks typically consider your company’s financial condition, the personal credit of the principals and your company’s time in business. Since invoice factoring is the purchase of your accounts receivable and not a loan, we base our funding decisions on the creditworthiness of your clients and not your company’s financial condition.
Companies that are growing in sales and their customers ask for payment terms. If your company has a product or service that needs to be sold giving payment terms, there is no tool better for you than using factoring.
Factoring can be used by almost any company which gives payment terms instead of receiving immediate cash for the products it sells. Companies use factoring to supply the cash needed to expand operations or maintain a current level of production without sacrificing other areas of the business. Selling Invoices (factoring) provides a quick and easy way of receiving cash.
If your company gives sales terms, is growing rapidly and sells to reputable Customers, it qualifies for factoring.
We do it for you. This is 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.
No. Factoring is a service which is accounted for as an operating expense instead of a debt. Entering into a factoring agreement will not hurt your credit history or increase your liabilities on the balance sheet of your company.
We fund you 24 hours after having your account opened with us.
The first thing to do is to fill the online application and send it to us by email to firstname.lastname@example.org. One of our representatives will contact you immediately and 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.
Fees vary depending on the variety and creditworthiness of your customers, on the value of each Invoice, and the duration of each invoice’s terms. Summar Financials average fees range from 1% to 3% over the face amount of your invoice.
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.
In our experience, having factoring is a positive aspect and is seen positively by your 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 give payment terms to them. It’s a win – win scenario where 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.
Yes, your company can continue performing Accounts Receivable maintenance duties on all your accounts even if you are doing factoring, as long as you remember that all payments on your invoices go directly to your factoring company.
Depending on your factoring company you could have a non‐recourse or a full recourse factoring contract. Typically, on a non‐recourse factoring contract the risk and potential loss of a customer defaulting on a payment of an invoice relies on the factoring company. On full recourse factoring contracts, typically your company would be responsible for any default or non-payment risk.