Comparing Factoring Benefits - Which Invoice Factoring Company Should You Choose?

Apples to Apples – Which Invoice Factoring Company Should You Choose?

Compare key components found in factoring proposals including factoring advances and fees, client obligations and invoice factoring company benefits.

Key Components of Invoice Factoring Proposals

The key components that you will find in proposals for invoice factoring services generally come down to three things: The amount of factoring advances and fees, client obligations and factoring company benefits.

Here are some things to compare when choosing between invoice factoring services:

  • Advance Rates
  • Reserve Rates
  • Factoring Fees
  • Add-on Fees
  • Funding Options
  • Account Limits and Debtor Limits
  • Monthly Minimums or Factoring Requirements
  • Contract Length and Termination Clauses
  • Buy Back Stipulations
  • Factoring Client Obligations
  • Factoring Program Benefits – Factoring Company Promises

Invoice Advances, Reserves and Factoring Fees

Advance Rate

This is the amount (usually expressed as a percentage) of the face value of an invoice that the factoring company will fund when you factor an invoice.

Reserve Rate

The reserve is an amount (usually expressed as a percentage) of the face value of an invoice that the factoring company will hold back “in reserve” pending payment from your customer on a factored invoice.

Factoring Fee

This is the cost of factoring an invoice. Like the advance and reserve, it is often expressed as a percentage of the face value of an invoice the factoring company will retain as it’s fee when you factor an invoice.

Added together, the advance rate, reserve rate and factoring fee should equal 100%. Here is an example of their application:

  • Day 1 – Factor an invoice and get fast funding of 90% of the invoice amount, with 5% held in reserve and a 5% factoring fee.
  • Day 30+ – Receive the 5% reserve after your customer has paid the invoice (factoring company retains the other 5% as their factoring fee).

Introductory Advance Rates and Factoring Fees

Some factoring companies use low introductory rates or progressive fee structures that sound appealing, but in actuality represent a higher invoice factoring fee than many of their competitors.

Some factoring fees are flat – meaning a small percentage is the only cost of factoring an invoice regardless of how quick your customer pays the invoice. Other factoring fees might sound low but when reading the fine print you may discover fees are assessed weekly instead of monthly, or are progressive in some other way.

Because of this, a flat, one-time 5% factoring fee might ultimately be less costly to your business than a lower fee offered by a factoring company that assesses the fee weekly, especially if your customer takes several weeks or even longer to pay. Just like compounding interest, the longer the invoice remains outstanding, the higher your cost of financing will be. Given that payment terms are often 30, 60 or even 90 days, a competitive, one-time flat fee will often be far more economical than a low fee applied progressively.

To avoid increasing the cost of factoring, look for proposals where a one-time factoring fee is your “all in” cost of factoring. I.e., there are no additional costs for processing schedules, funding advances, maintaining your account, and so on.

Add-On and Hidden Fees

Some factoring companies have add-on and hidden fees that should be taken into consideration when comparing invoice factoring services; such as fees that will be charged for:

  • Schedule processing
  • Collection activities
  • Due diligence
  • Customer credit checks
  • Online account access
  • Account administration or maintenance
  • Funding fees (which may vary depending on method of funding)
  • Buy-backs / chargebacks

When reviewing a proposal for invoice factoring services, look beyond the advances and factoring rates to determine if there are add on or hidden costs that might drive up the real cost of invoice factoring, thereby reducing its benefits as a cash flow management tool.

In addition, your proposal for invoice factoring services should also outline the account limit (how much money the factoring company will have out on advances at any given time for all factored invoices) and account debtor limits (the amount the factoring company is willing to have out on advances at any given time for an individual debtor).

Factoring Client Obligations

As the factoring client, your obligations are any and all conditions you agree to fulfill in your relationship with the invoice factoring company (or the Factor). These terms may include personal guarantys, buy back stipulations (especially when factoring with full recourse), monthly minimums, contract termination and notification requirements, and monthly reports your company agrees to provide to the factoring company.

The terms which define your obligations as a factoring client could vary greatly, depending on which invoice factoring company’s services you are considering. Some of these obligations can radically impact how effective the factoring company’s program will be in helping to expedite cash flow for your organization.

Invoice Buy-Back Stipulations

Buy-back stipulations are conditions that require you to buy back an invoice previously factored. Full recourse factoring companies may require you to buy back invoices if they go unpaid for a set period of time, such as 30, 60 or 90 days, etc. They may also require you to buy back invoices if they are not paid due to credit reasons, such as insolvency of your customer. Buy-back stipulations may also require you to reimburse a factoring company for collections or legal activities undertaken in trying to recover unpaid customer payments.

Opting to factor with a non-recourse factoring company may afford your business additional financial protection. If an invoice that has been factored is not paid due to insolvency of your customer, in most cases the non-recourse factoring company will absorb the loss, not you. With non-recourse factoring, clients aren’t usually required to buy back invoices unless an invoice is disputed by the customer.

Factoring Minimums

Some factoring proposals require that you factor a minimum dollar amount or a minimum number of invoices each month, or may stipulate a higher factoring fee be charged if minimums are not met. Some proposals require that a client factors any and all invoices generated for a given client, or even that they factor all of their receivables.

Working with a factoring company that doesn’t require you to commit to factoring minimums can keep you in the driver’s seat, so that you can do what is in the best interest of your organization and factor only when you choose. We offer spot factoring and no-minimum factoring proposals so you can stay in control.

Contract Termination and Notification Clauses

If you decide to stop factoring or you have determined that the invoice factoring services offered by another company would be better for your business, some factoring contracts will require that you provide advance notification – sometimes as much as 120 days in advance.

Failure to meet the notification requirements might make it impossible for you to make a change without absorbing significant financial penalties, or you may have to wait another 8-9 months before you can stop factoring or change factoring companies.

Before signing a factoring agreement, find out what penalties or notification requirements will apply should you decide to stop factoring or take your business to a different factoring company. You may also look for a factoring company (like Corsa Finance) that doesn’t require you to sign a long-term contract or penalize you if you decide to stop factoring with us.

UCC-1 Filing

As a client, you should never sign a proposal that gives a factoring company authorization to file a UCC-1 financing statement on your business before you have been allowed to review all of the closing documents (e.g., factoring contracts) that will apply to the relationship.

Benefits to Look For in an Invoice Factoring Agreement

The benefits outlined in proposals for invoice factoring services that will be provided by the factoring company are the promises and perks that their clients will enjoy, in addition to expedited cash flow from factoring invoices.  This includes factoring advance rates but may encompass promises of good customer service, knowledgeable account managers, client online account access, reports, funding options, credit checks on customers, etc.

Since the program benefits provided by factoring companies may vary greatly, here are some of the benefits you might want to look for in a factoring agreement.

  • Fast funding on advances (ACH) – within 1-2 business days (or even faster)
  • Additional funding choices (wire funding, etc.)
  • Free credit checks to help you vet new customers or establish limits
  • Consistently high level of professional customer service
  • Dedicated account managers who understand the client’s business and preferences
  • 24 x 7 online account access
  • Transparency – no hidden fees
  • No application or account administration fees
  • No long-term contracts or monthly minimums
  • Spot factoring and micro-factoring
  • Competitive advances and factoring fees
  • Non-recourse factoring to reduce credit risk
  • Non-notification factoring to white label a seamless experience for your clients

Benefits of Working with the Best Invoice Factoring Companies

The primary reason companies factor invoices is to expedite cash flow, whether to meet expenses or grow an organization more quickly, and often both. When comparing invoice factoring services, take into account the extent to which the program seems designed to help you speed up cash flow so that you can reinvest in your organization more quickly.

  • The best factoring companies look for reasons to say “yes” when it comes to approving a client or approving an account debtor, even when it means looking past a credit score or list of assets.
  • The best factoring companies offer competitive rates and fees and have a program that is transparent, so that their clients are not hit with unexpected fees or surprises.
  • The best factoring companies leave more decisions up to the client so that they can do what is in the best interests of their organization.
  • The best factoring companies become trusted financial partners because they design their programs, operate and provide professional customer service – day in and day out – with a view for the long-term.

Get a free, no-obligation proposal for invoice factoring services or request more information about our programs by applying online, calling us at 866-855-6772 or completing the form below. We’ll listen to what’s most important to you and your business and work with you to design a factoring program that represents a good match, so you can stay focused on your business.

  • Average monthly sales or amount of invoice to factor
7 Intangibles the Best Business Invoice Factoring Companies Provide

7 Intangibles the Best Business Invoice Factoring Companies Provide

Intangible assets are real, they just aren’t physical in nature. The best business invoice factoring companies are set apart by the added value their intangibles provide.

Apart from factoring rates and advance amounts, what factoring companies do — the services they provide — are basically the same from Factor to Factor. We offer competitive factoring rates and high advances with fast funding, yet we believe it’s the things you don’t see — the intangible qualities which characterize our services — that help our clients the most.

Investopedia describes intangible assets as items which don’t exist in the physical sense, yet “are valuable because they represent potential revenue.” When comparing business invoice factoring companies’ rates and fees, it’s important to remember that the value they add in the way they do business and how they treat their clients could impact your bottom line, too.

7 Intangible Characteristics the Best Business Invoice Factoring Companies Provide

1. Speed

The goal of business invoice factoring is to speed up cash flow. When you factor with a company that provides fast approvals and fast funding, you can stay focused on your business instead of chasing customer payments or waiting on cash flow.

We know that the faster the factoring company’s team works, the more they can help you grow your business. Factoring with a company that provides a consistent, high level of customer service saves your company time and money.

2. Cost Savings

Some business invoice factoring companies advertise low factoring rates, then charge add-on fees or apply fees progressively in order to increase revenue. Unfortunately, these additional fees reduce your profits.

Our goal is to help you grow your company to the next level, so we avoid hidden invoice factoring costs that reduce your profits, from the application process to schedule processing. We offer factoring programs with:

  • Program transparency – no hidden fees
  • No application or due diligence fees
  • No charge for processing factoring schedules or notifying you that the work has been done or your account has been funded

In addition, we work with you to tailor a factoring program so that it’s well-suited to your company’s financial needs; with:

  • Competitive factoring rates – and ask about bundle discounts!
  • Competitive advances to help you unlock working capital
  • Fast, free funding

3. Trust

Some business invoice factoring companies lock you into contracts for the long term with penalties and lengthy auto-renewal clauses. We believe that the best invoice factoring companies choose to earn your trust, long term business and referrals through their performance.

We don’t require factoring clients to sign long term contracts, nor do we have factoring minimums. As the client, you stay in control so that you can always do what you think is best for your business.

4. Partnership Mentality

We want to help you grow by empowering you to take control of your cash flow, so you can take your company to the next level. From the way our factoring services let you stay in control to fast approvals and dedicated account managers who understand your needs and preferences, we want you to have  tools your business needs to become more profitable and grow.

5. A “Yes” Culture

Every business is more than a credit score or an asset list. From evaluating your application for business invoice factoring services or a potential new customer, credit limit or rate request, we look for reasons to say “yes!” and say yes quickly.

6. Added Value

We will work with you to tailor a factoring program that aligns with the unique needs of your business, instead of forcing you into a one-size-fits-all service. The best invoice factoring companies add value whenever possible, giving you added value in the form of:

  • Dedicated account managers
  • Ability to serve any-size organizations, including independent contractors and SMBs
  • Manual credit review when higher approval amounts are needed
  • Credit reporting to help you vet new customers
  • A growing library of articles and tools on our blog to help with business growth, many specific to your industry
  • Partnerships with other alternative financing companies to make sure you find the financing tool that is most appropriate for your business

7. Flexibility

Corsa Finance is unique in being able to offer multiple types of factoring under one roof, including:

  • Non-notification factoring with a white-labeled factoring program that provides your clients with a seamless customer experience
  • Full recourse factoring
  • Non-recourse factoring that offers additional business protection by limiting your credit risk from bad debt
  • Spot factoring for a company that wants a one-time or only very occasional factoring solution
  • Micro-factoring for small companies and independent operators that other factoring companies might not consider

If you’re ready to work with one of the best invoice factoring companies in the U.S., we would love to partner with you and help you grow your business. Apply online or request a free, no-risk factoring proposal by calling 866-855-6772 or completing the form below.

  • Average monthly sales or amount of invoice to factor
The Hidden Costs of Invoice Factoring

The Hidden Costs of Invoice Factoring

Six hidden costs of invoice factoring could make factoring invoices more expensive and less beneficial as a cash flow management tool.

6 Hidden Costs of Invoice Factoring Reduce Benefits and Drive Up Cost

When comparing the invoice factoring proposals of U.S. factoring companies, remember to look for additional costs and add-on fees in addition to the factoring fee that is being offered.

These fees and charges may seem small but when you do the math you can clearly see that they quickly eat into your business’ profits and jack up the real cost of invoice factoring.

1. Add-On or Administration Fees

Though it seems like administrative services should be part of the service provided, some invoice factoring companies tack on extra fees for the administrative tasks that are part of the invoice factoring process.

Any add-on cost drives up the real cost of invoice factoring. Some of the other hidden fees factoring companies might tack on include things like:

  • Application fees
  • Proposal fees
  • Due diligence fees
  • Credit check fees
  • Notification fees
  • Schedule processing fees
  • Invoice processing fees

We don’t charge any application, due diligence, credit check or account set up fees that drive up the cost of factoring. Nor do we assess extra fees to process paperwork, transfer funds or notify you of account actions. We view these types of tasks as intrinsic to the invoice factoring process, not as add-ons.

2. Long Term Contracts

Some factoring companies require clients to sign long-term contracts that might range from 6, 12, or even 24 months, and harbor strict renewal and notification clauses. If a client doesn’t adhere to the contract’s conditions or needs to be released from the contract before the terms are up, significant penalties are often assessed.

We don’t require clients to sign long-term factoring agreements, so they aren’t locked into an agreement that may no longer be right for their business. We believe the best factoring companies earn their clients’ continued patronage through professional customer service and outstanding performance, not long-term contracts with stiff penalty clauses for leaving.

3. Monthly Minimums or Other Minimum Factoring Requirements

Some factoring companies require clients to commit to factoring a minimum number or dollar amount of invoices every month or every quarter. If they fail to meet these minimums a penalty fee is assessed. Being locked in to factoring minimums may not be what is best for an organization. Factoring is a financing tool meant to help an organization grow more quickly, but mandated factoring isn’t always what’s best for a business. We don’t require clients to commit to factoring minimums. They have the freedom to factor only when it’s best for their business.

4. Introductory Rates, Fees or Other Conditions

Some factoring companies offer low introductory rates to new clients, then down the line they lower advance rates and raise factoring fees, quickly wiping out any savings enjoyed during the introductory period. In other cases, factoring companies offer what sounds like a low fee, but fine print reveals the fee is applied weekly or progressively, which then also costs the client more. We value transparency and simplicity. As our client, you will know what your advance rate and factoring fees will be from the outset, so you can make financial decisions in the best interests of your organization.

5. Lost Customers

When an organization factors invoices, the relationships they have with their customers may also be impacted by the factoring company they chose to do business with. A factoring company that engages in strong-arm collections tactics or pressures customers to pay more quickly could result in lost customers for a business. We view factoring as a tool our clients can use to grow their business and we want clients to use our services for as long as it benefits their bottom line. This view to the long term means we extend a high level of professional, courteous customer service to our clients’ customers as well.

Another way we help improve cash flow without jeopardizing customer relationships is through non-notification factoring. With non-notification factoring, the customer may never know an company is utilizing invoice factoring because the process is white-labeled to the organization almost completely, providing a seamless customer experience.

6. Recourse Factoring Buy-Back Stipulations

Most U.S. factoring companies factor invoices with recourse. Organizations that factor with full-recourse may be required to buy back an invoice at its full face value if a customer does not pay within a given period of time, if the customer cannot pay due to insolvency or for any other reason.

We do offer full-recourse factoring, but we also offer non-recourse factoring services that help minimize the organization’s risk from bad debt. With non-recourse factoring, we assume the credit risk for the invoices factored by an organization, and (in most cases) absorb the loss if a customer is unable to pay.

Eliminate the Hidden Costs of Invoice Factoring

Transparency with our customers is one of our guiding values. We are proud to offer receivables financing that is free of the hidden costs of invoice factoring, including the add-on costs some other factoring companies use to produce additional revenues. Ideally, your factoring fee will be your “all in” cost of financing.

Since it is likely your intention to utilize invoice factoring to speed up the incoming cash flow from invoices currently on your books (and thus get that working capital back into your business more quickly) it stands to reason you should compare the advance amounts and factoring fees offered by factoring companies (or Factors). As an educated, astute shopper of these services, you should never sign on the dotted line until you know exactly how the program works, all the fees that may apply, and how factoring your invoices could impact your profitability.

If you have questions about your factoring contract, want a quote for comparison or would like to find out more about our services, request a quote. We will be happy to provide you with a factoring proposal which you can compare against your current agreement.

  • Average monthly sales or amount of invoice to factor
6 Reasons to Revise Your Receivables Factoring Agreement

6 Reasons to Revise Your Receivables Factoring Agreement

As your business changes and grows, its financing needs will too. Here are six signs you should have your receivables factoring agreement reviewed and re-quoted.

6 Signs You Need a New Receivables Factoring Agreement

As with any other supplier or vendor, it’s only natural that you will review your invoice factoring agreement from periodically to ensure you have a factoring agreement in place that’s best for your business. Here’s why “now” might be a good time to take a fresh look at your agreement and your receivables factoring company.

1. The end of the invoice factoring contract term is approaching.

Just as you would review any other type of contract, before you renew your receivables factoring agreement you should review it and compare it against other offers. Factoring companies might be willing to eliminate unwanted clauses or offer you better terms or rates – or you may find that another factoring company is willing to do so.

You should pay very close attention to the fine print in your current agreement that would require you to provide your current factoring company with 30, 60, or even 90-day notice to terminate your agreement. Unfortunately, if you miss the termination window you may be forced to continue factoring with the same organization for another year or more.

What is receivables financing?
Receivables financing (also known as accounts receivable invoice factoring) is a business finance tool that provides your organization with immediate access to money owed to your business by your customers, without waiting weeks – or months – for the invoices to be paid. Find out more about Receivables Financing.

2. Increases in factoring fees or rates.

Since improving cash flow is an important priority for most businesses that factor receivables, when profits are negatively impacted by increases in costs or rates it’s important to evaluate whether your current agreement is the right one for your organization.

3. Disappointment with the customer service your receivables factoring company provides.

Poor customer service impacts more than just the client who is factoring invoices, it often affects their customers as well. When evaluating how satisfied you are with your factoring company, you may also wish to speak with some of your most valuable customers to ensure that the communications and collections being conducted by your factoring company are also beneficial to the relationship between your business and its customers.

Our goal is to provide the level of service that leads to high client retention and referral rates. We want clients to choose to stay with us throughout the time they employ invoice factoring as a finance tool and to feel comfortable referring colleagues to us on a regular basis.

4. Hidden fees are adding up.

An invoice factoring fee (usually a percentage) is only one of the potential costs that could be hiding in an invoice factoring agreement. We will review any agreement presented to you to explain the fee structure.

We help our clients get factoring contracts that are transparent and simple, with factors that don’t tack on fees for administrative work, schedule processing, proposals, due diligence, customer credit checks or notifications. Hidden fees might seem small but can quickly add up and negate some of the benefits that factoring invoices should be generating when it comes to your organization’s cash flow and working capital.

5. Not meeting monthly minimums (you want to factor fewer invoices).

If your current factoring agreement requires that you factor a minimum number (or amount) of invoices each month and you find that you do not need to (or do not want to) factor up to the minimum, it is a good time to reach out for new terms from your factoring company or to explore competitive proposals.

We have clients who want to use factoring only when its right for their business with contracts that enable them to factor as many (or as few) invoices as they desire. We believe that letting factoring clients retain control of these types of decisions is important, because it has a big impact on their organization as well as how satisfied they will be with our receivables financing service. Invoice factoring becomes an even more practical and helpful financing solution when you stay in control.

6. You simply don’t want to be locked in to a long-term contract.

Depending on the agreement you choose, you won’t have to sign a long-term factoring contract. Remember that this can be a matter of negotiation which could encourage Factors to offer you an agreement with lower rates, higher advances or some other perk.

We want to earn your business and referrals. We believe that once work with us you’ll be so pleased with the level of professional and personal service that you won’t want to leave. If at any time, you feel that the level of service provided by our team isn’t meeting your needs anymore, you’re free to leave without the fear of a long-term contract or exit penalties hanging over your head.

Ready to get a new receivables financing quote?
Whether this is your first request for an invoice factoring proposal or you’re already factoring invoices, we would be happy to give you a free, no-obligation invoice factoring proposal – you could go from approval to funding in days.

  • Average monthly sales or amount of invoice to factor
4 Ways to Use a Commission Advance for Realtors

4 Ways to Use a Commission Advance for Realtors

When a real estate commission is factored, it generates a commission advance for realtors that can be used for nearly any business purpose, including expenses that can help a realtor grow their business faster.

How Can a Commission Advance for Realtors Be Used?

1. Real Estate Brokerage Operating Expenses

A commission advance for realtors could free up funds that you need to pay just about any of your business’s expenses:

  • Lease or mortgage
  • Office furniture and supplies
  • Accountant or tax preparer fees
  • Utilities
  • Subscriptions
  • Taxes
  • Computers, equipment and software
  • Unexpected expenses such as the need to make repairs

And more. If you need to unlock working capital to keep your brokerage going and growing, a commission advance can help you bridge a gap or offset a seasonal slowdown.

2. Marketing and Advertising Costs

Some real estate agents hold back on marketing until the market slows down. In reality, when the market is healthy and sales are moving well is the time to be marketing – in anticipation of any future seasonal or cyclical slowdown. This means that whether the market is slow or fast, you should be executing an effective and consistent marketing and advertising strategy that helps you get found online and keeps your brand “top of mind” with prospective buyers and sellers. Expenses that fall into this category could include:

  • Print, digital, TV or radio advertising
  • Building a new website or refreshing your existing site
  • Graphic design (logo, brand colors, ad copy and layout, etc.)
  • Postcards and flyers
  • Targeted paid ads and boosted posts on social media
  • Email marketing
  • Networking and memberships (Chamber, Rotary or similar groups)
  • Vehicle wraps and clings
  • Agency signage
  • Customer appreciation
  • Branded SWAG and gifts
  • Zillow, Trulia and similar paid-listing accounts and ads

Real estate marketing is a smart investment in any economy. It’s the only way to reach new prospects and maintain top of mind awareness in your network, which can make all the difference in being the agent contacted when a buyer is ready to make a move or a seller needs an agent.

3. Professional Expenses

You can use a commission advance for realtors to gain access to the money you need for licensing, insurance, continuing education, exam fees and more. Trade shows and conferences also fall under this heading, as do the travel-related expenses that often accompany them. You can also use a commission advance for realtors to access the money needed for professional memberships, such as membership in the National Association of Realtors, a local or regional association, women or minority associations, and so on.

4. Transportation Costs

The average realtor logs about 3,300 miles a year on their vehicle (National Association of Realtors). Since it’s basically a requirement for doing business as a real estate broker, transportation costs including vehicle purchase, vehicle leasing, repairs, insurance and other expenses may be appropriately funded by a commission advance for realtors, even if the vehicle is also for personal use.

Why Use a Commission Advance for Realtors?

The business of a real estate broker is unique in many ways. People who work for a salary put in their time and are generally compensated with a paycheck every two weeks that is in a predictable, consistent amount. By contrast, realtor commissions that are earned and on the books represent a percentage of the sale amount and could take weeks – or even months – to go from earned income to dispersible funds.

The gap between a signed around purchase and sale agreement and the property’s closing date (which the broker may have little to no control over) can put a financial strain on a real estate brokerage. Bills have to be paid, including payroll. Membership fees come due. Lease payments come back around. Unexpected expenses pop up – the list goes on and on.  A broker may even find that closing and disbursement of funds could even be delayed past the anticipated date, further straining the finances of the real estate business.

Real estate commission factoring is a tool that can alleviate the financial strain on an occasional or even a regular basis. Instead of waiting weeks or months to receive the income you’ve already earned, you can use a commission advance for realtors to access as much as 93 percent of an earned commission right away – without impacting the closing date, and without impacting your buyer or seller at all.

Request information about a commission advance for realtors using the form below or apply online:

  • Date Format: MM slash DD slash YYYY
Solving Slow Cash Flow with Invoice Factoring

Beyond Price and Profit – How Slow Cash Flow Can Hurt You

Profitable business can still be poor ones. Slow cash flow can slow or stall growth. Plan for healthy cash flow, not just profit margins, to build a growing, sustainable business.

High Profit Margins Won’t Keep Slow Cash Flow from Hurting a Growing Business

The number one reason businesses go under is not lack of profits, but lack of cash, or slow cash flow. It is not enough to plan and price for profitability. To be successful, grow and thrive, you have to accurately forecast and plan so that your business has adequate money coming in.

In 10 Things Every Small Business Needs to Do, Bplans.com cites the number one reason small businesses go bankrupt as slow cash flow — not lack of profits. It’s a good reminder that accurately predicting the ebb and flow of your small business cash flow and planning accordingly is going to be a key factor for your success.

Small business cash flow is represented in financial statements in essentially three forms:

  • Operational cash flow is money coming in or going out as a result of an organization’s business activities; obviously to be sustainable, a business needs to have more money coming in than going out (although short term periods of negative cash flow should occasionally be planned for and *managed).
  • Investment cash flow is money received from the sale of long-life assets or spent on capital expenditures (things like investments, acquisitions or assets expected to have a long life)
  • Financing cash flow is money received from the issue of debt and equity or money paid out as dividends, share repurchases or debt repayments

Small business cash flow can be impacted positively or negatively for a number of different reasons:

  • Sales (volume) higher or less than expected
  • Payment terms that you extend to your customers
  • Naturally occurring seasonal or cyclical highs and lows
  • Interruptions to the customer buying cycle, such as economic recession or concerns
  • Introduction of new technologies, additional competitors or other changes to the marketplace
  • Influx or depletion of numbers of potential customers in your target markets
  • Equipment failures or facility deficiencies
  • Lack of inventory or space needed to achieve adequate sales volume

Apart from the unexpected, many of these factors that can create slow cash flow should be considered as you draw up your business plan and revisit your long-range plan from year to year. In fact, many of these conditions should reveal themselves in the SWOT and PEST exercises common to most (formal) small business plans, long range plans or marketing plans.

Solving Slow Cash Flow with Invoice Factoring

One way to mitigate short term slow cash flow challenges is to take advantage of small business funding options, like those provided by Corsa Finance. We offer small business cash flow financing through invoice factoring (also called accounts receivable factoring).

Small business funding through invoice factoring occurs when a company that invoices their customers for payment factors – or “sells” – the invoice to a factoring company at a discount (for a low factoring fee). When they do so, they receive up to 93% of the invoice amount immediately instead of having to wait for customer to pay the invoice. Once the small business’s customer has paid the invoice any amount held in reserve goes back to the small business, too. Factoring can eliminate the problem of slow cash flow completely, since invoices can be factored on the same day a customer invoice is generated.

Better cash flow = better business performance and growth!

Whether you employ one of our business finance tools to improve cash flow and get access to working capital or you have another means of financing, having adequate cash flow to meet operational needs and to execute business growth strategies is critical for the long term health and success of your small business.

With slow cash flow, you may have trouble meeting day to day operational needs, you might come up short for payroll, or you might find yourself unable to make capital investments in order to grow. With expedited cash flow, you will be able to execute many business growth strategies, such as:

  • Expanding, renovating or remodeling
  • Meeting expenses on time, including payroll
  • Replacing broken, aging or obsolete equipment
  • Hiring additional employees
  • Purchasing larger quantities of inventory or new product lines
  • Adding new service capabilities to your service menu
  • Executing large-scale marketing initiatives
  • And more

We would be happy to help you decide if invoice factoring can help your business. Feel free to contact us at 855-882-6772 or request a free, no obligation quick quote for cash flow financing online and get answers in as little as 24 hours. 

  • Average monthly sales or amount of invoice to factor
5 Ways to Make Your Business More Profitable by Factoring Invoices

5 Ways to Make Your Business More Profitable by Factoring Invoices

Few businesses can say they don’t want improved cash flow. From budget deficits to delinquent accounts, here are five signs your business might be more profitable by factoring invoices instead of waiting on customer payments.

Getting paid more quickly can help entrepreneurs, startups and small businesses in a big way by improving cash flow and supplying the cash-on-hand needed to grow.

Small businesses often dream of landing a big account but find that large corporations hold all the cards when it comes to setting terms, including pricing, profit margins and timing of invoice payment. Slow-paying customers make for fast cash flow drains that can hurt a small business, erode profits and even threaten viability.

The good news is that there is more than one way to improve cash flow. Factoring invoices can put the power back in your hands and give your organization the money it needs to become more profitable and grow more quickly over the short or the long term.

5 Signs a Business Should Consider Factoring Invoices to Become More Profitable

  1. Discouraged by Delayed Payments

By the time you make a sale, the math is already upside down. When you consider that you have incurred costs for marketing and advertising, manufacturing, shipping, supplies, transportation, payroll and all of the other costs of doing business, it’s easy to see why it would be discouraging to wait for customers to pay on time, let alone waiting on customer payments that are past due.

Analyzing 409 companies from Standard & Poor’s 500-stock index puts the average time to pay suppliers at 46.5 days, but also notes that small businesses wait even longer to get paid, two months on average. Delayed payments mean delayed reimbursements for the costs you’ve incurred as well as delayed reinvestment in order to grow your business.

When you factor invoices, you collect payment immediately. This empowers you to maintain more consistent cash flow and ensures that you will have money on hand to meet expenses.

  1. Dealing with Budget Deficits

When you are waiting for customers to pay, cash flow challenges can compound. If you make late payments, you may incur penalties that further erode your company’s profits. When you factor invoices, you gain immediate access to the money customers owe you. As a result, you can pay your creditors more quickly. Knowing that you will have the cash needed to pay can even give you leverage with suppliers that will enable you to save money by negotiating more favorable terms with vendors or allow you to take advantage of volume discounts. When you cut your costs and save money, you improve your profit margins!

  1. Desire to Limit Risk of Defaulting Customers

Slow-paying customer accounts are bad enough; but what happens when your customer can’t pay at all? Dealing with bad debt is one of the costs of doing business that can cut into your profit margins in a big, bad way.

Bad debt is a big problem. In 2010, US businesses placed $150 billion with collection agencies, who were only able to collect about $40 billion of that total (www.debtcollectionanswers.com). The SBA (Small Business Association) reports that only about 1/3 of all new businesses will still be around after 10 years. If a customer has filed for protection or gone out of business, even costly recovery efforts may prove fruitless.

Factoring invoices with a non-recourse factoring company is one way to protect your company – and your profit margins – from the negative impacts of bad debt. Non-recourse factors assume the credit risk for factored invoices, which can reduce or even eliminate your organization’s risk from bad debt.

  1. Looking for Competitive Advantages

Being able to improve profits and better manage cash flow can lead to additional perks that can help your business become even more profitable. Factoring invoices gives you access to the money locked down in customer receivables right away – without waiting for customers to pay. Since waiting on customer payments is no longer a problem, you can create a competitive advantage for your organization by extending more favorable terms to your customers.

  1. Pursuing Bigger Opportunities

Since factoring invoices allows you to reinvest in your business more quickly, you can also grow more quickly. Whether you want to take on more work simultaneously, pursue bigger projects or land bigger fish, factoring gives you the ability to put more capital to work to promote and market your business, to expand, or to pay for supplies and the up-front costs needed to serve larger accounts or take on more jobs at the same time.

Request a free, no-obligation quote and expedite cash flow by factoring invoices instead of waiting on customer payments. Contact us at 855-882-6772, speed up the process by applying online or email us using the short form below.

  • Average monthly sales or amount of invoice to factor
7 Signs Point to a Real Need for Business Growth

7 Signs Point to a Real Need for Business Growth

Complacency is a trickster, don’t fall for it. These seven signs clearly indicate that now is the right time to for business growth.

The Time is Right – 7 Indications that Business Growth Should Be Your Top Priority

Complacency is a trickster. Not only does it creep up on us unawares, it also creates blind spots, leaving us open to missing opportunities or warning signs. If one or more of these seven clear signs that point to the need for growth applies to your organization, it might be time to prioritize marketing and operational strategies that can help you grow your business.

7 Characteristics of a Business Needs to Grow to the Next Level

  1. Benchmarks hit – or missed.

It is said that Alexander the Great wept, simply because he believed there were no new worlds to conquer. If you have hit the goals that you set for your business, it’s time to set new ones. Conversely, if you have missed goals and benchmarks that you anticipated reaching by this point, it could well be that your business needs to grow in order to meet them.

  1. Cash flow challenges. It’s common for a business to experience cash flow challenges from time to time; however, if your business has a track record of coming up short when it comes time to meet operating expenses or payroll, or you do not have the money you need to expand – or even replenish – inventory, then it is very likely that your business needs to grow in order to enjoy more stability and sustainability.

At Corsa Finance, solving business cash flow challenges is our specialty. Clients use our invoice factoring services to speed up cash flow, in order to more easily:

  • Meet operating expenses and payroll
  • Finance business purchases, repairs and renovations
  • Cover unexpected expenses
  • Maintain cash flow during cyclical or seasonal lulls
  • Replenish or expand inventory
  • Add new products or services
  • Expand by adding location square footage or opening up new locations
  • Execute strategic marketing campaigns or pay for new marketing tools
  • Hire temporary staff seasonally or while growing
  1. Employees stretched too thin – or becoming bored.

One sure sign that you need to grow your business (so you can hire more employees) is when you and one or more of your staff are stretched too thin, wearing too many hats or juggling too many responsibilities – often with the result that tasks aren’t getting done on time or they fall completely through the cracks.

On the other hand, employees who are bored, disengaged or disinterested may be telling you that it’s time to grow your business. Adding new projects and challenges to employees’ jobs may be just the thing to keep them interested and engaged with your business.

  1. There’s new technology on the horizon.

Your business may need to grow in order to keep pace with technology advances in your industry; conversely, the emergence of new technology may be providing you with new ways to grow your business.

  1. Customers losing interest or shopping around.

If customers believe that they know all there is to know about your business or have experienced all the benefits your products and services have to offer, they may begin to lose interest or shop around to see whether competitors may have something more to offer.

Keep customers interested by growing your business (expanding or changing your product or service lineups) and engaging in marketing campaigns that create intrigue, incentivize loyalty or stimulate word of mouth marketing.

  1. Your industry is evolving.

Technology is not the only industry innovator that may make it desirable for your business to grow. Finding more efficient ways to do business, new ways to promote a business or identifying new target markets can all mean that it’s time for your business to grow beyond its old boundaries.

  1. Competitors are gaining ground.

Whether in the form of direct competition or indirect competition (e.g., there are substitutes or alternatives to your business or its products or services), when competitors begin to eat away at market share it’s a sure sign that your business needs to grow and evolve, as well.

***

Do you need improved cash flow for business growth?

Here are four things that must be part of your plan for business growth:

  • Clear vision, understandable, well-defined mission and a strategic marketing plan
  • The right people on your team
  • A plan for how infrastructure will evolve with business growth
  • Working capital and business financing tools

We provide receivables invoice factoring services that can be used for business growth and sustainability.  We would be happy to help you determine if factoring can help your business, or provide you with a no-risk, free proposal for business financing that could take you from approval to funding in a few days – or even faster.

Contact us at 855-882-6772 or email us by completing the short form below: 

  • Average monthly sales or amount of invoice to factor
Invoice Factoring Means Improved Cash Flow

Invoice Factoring Means Improved Cash Flow

How does invoice factoring affect cash flow?

There are very few forms of business finance that have been around as long as factoring, and yet invoice factoring (also known as invoice discounting, A/R factoring or receivables financing) is not part of the common business lexicon for most B2B small business owners in the U.S.

Invoice factoring is a centuries-old business financing tool that originated when bankers would provide manufacturers with an advance on goods so that manufacturers did not have to wait for products to travel to far-away lands before taking on new business.

According to Wikipedia: “Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party – called a Factor – at a discount.”

The idea of invoice factoring might seem complicated, but it’s actually very simple. Accounts receivable are assets since they represent money that will – eventually – flow into an organization and which they can then reinvest in growing their business. Organizations choose to factor invoices with a company like Corsa Finance, instead of waiting for customers to pay, in order to expedite organizational cash flow.

How the process works to improve cash flow:

The biggest reason companies choose to factor invoices with a company like Corsa Finance is to unlock working capital tied up in invoices in order to expedite organizational cash flow. Companies that factor invoices with us receive same and next-day advances on invoices factored with us for a small fee called a factoring fee.

Expediting cash flow by factoring invoices can speed up business growth.

Sometimes businesses that invoice their customers wait weeks or even months to receive payment for invoices. So while they have assets on the books in the form of money owed to them via accounts receivable, they don’t actually have the ability to use that money to grow their business until the invoices have been paid.

Organizations that factor invoices with Corsa Finance pay just a small percentage to get access to 90% or more of the working capital that would otherwise be tied up in their accounts receivable on the same or next business day the invoice is factored.

That means that they have access to the working capital needed to meet payroll, fill the next customer’s order or money needed to take on bigger customers and larger orders, purchase equipment, expand inventory or services or execute other business growth strategies while we wait for the invoice to be paid, instead.

Apply or request a quick quote – either way, there is no cost, risk or obligation. Find out how much working capital your organization could unlock by leveraging your accounts receivables as an asset.

What type of organizations factor with us?

While most business owners in the U.S. are familiar with other types of business financing (such as bank business loans, small business loans, private investors or angel investors, etc.), invoice factoring is not a term many are familiar with outside of a few industries where factoring invoices is an every-day practice.

The team at Corsa Finance has decades of business financing experience with clients in a variety of industries; providing:

  • Temporary employer and staffing agency factoring
  • Factoring for specialty staffing agencies like nurse staffing, IT staffing and security services
  • Supply chain factoring for manufacturers and distributors
  • Factoring for landscapers and other local residential and commercial service contractors
  • Contractors and businesses serving the energy and utility industries
  • Factoring for manufacturers who sell through 3rd party e-commerce sites like Zulily and Amazon – and more

We work with factoring clients directly, but we also invite brokers to find out more about the benefits of working with us. Our commissions are competitive, and we pride ourselves on the high level of customer service we offer.

If you want to find out more about invoice factoring or find out whether it’s an appropriate business financing solution for your organization, contact us at 855-882-6772 or fill out our online application. We will process your application and provide you with a factoring proposal at no cost and no obligation.

Why Choose Corsa Finance for Invoice Factoring?

Organizations approved to factor invoices with us can receive funding as early as the same or the next business day. Approvals are fast and our rates are competitive. We offer non-recourse factoring, factoring with recourse and non-notification factoring, giving you more options to choose what is best for your business.

We don’t tack on additional fees.  Add-on and administrative fees can significantly increase the real cost of factoring. When you factor with us there are no hidden fees:

  • No application fees
  • No notification fees
  • No due diligence fees
  • No credit check fees
  • No reserve release fees

We want to earn your business as an invoice factoring client, so unlike many other factoring companies, we don’t require customers to commit to long-term contracts nor do we impose requirements like monthly minimums. In addition, we pride ourselves on our personal approach and the care we take with our customer relationships.

  • Average monthly sales or amount of invoice to factor