Supply Chain Finance – How it works
Let’s say you wanted to introduce a process improvement that would allow you to fulfill 20 percent more customer orders in the same period of time. The $8,000 in sales you would normally have made in a given week could be increased to $10,000 over the course of a year, resulting in $104,000 more in sales.
However, in order to make the improvement, you need to invest $10,000 into new technology for your business, and lack working capital to make this investment while still meeting operational costs. You decide to factor $12,000 worth of unpaid customer invoices, and gain immediate access to 90% of the face value of those invoices.
Cash in hand, you invest in the new technology needed to increase annual revenue by over one hundred thousand dollars, at a low financing cost which would be erased in less than the amount of the increased sales you made in one week.
- Immediate Access to Working Capital: $10,800
- Factoring Fee: *$600
- Reserve or Holdback Amount: $600
*Reserve/holdback is any money held back until your customer pays the invoice, at which time it is released to you.
We would be happy to provide you with a free, no-obligation quote for supply chain factoring services. Apply and get answers within 24 hours and find out how factoring invoices could benefit your company.
*Your factoring fee could be as low as 5% – or even lower – ask about volume discounts!