Q: What is a factoring company?
A: A company that specializes in purchasing accounts receivable at a discount and provides funding to the customer for the receivables purchased.

Here is an example of an invoice that was factored:

Amount of the invoice: $1,000.00
The total factoring fee: (5%): $50.00

Payment to customer: $950.00

Q: Why would a company sell its accounts receivables?
A: The biggest challenge that companies face is slow paying customers. Customers that want to pay their bills in 30 to 60 days. If you consider that most of your expenses need immediate payment and can’t wait, you can see why the numbers simply don’t work.  What is needed is a financing program that provides the cash needed to meet the immediate financial demands of their business, like payroll or fuel. Accounts receivable financing also provides the cash flow to:

Grow your business
Capture market share
Negotiate better rates
Save on the cost of credit investigation
Save on the cost of collection

Q: Is factoring a type of loan?
A: No. Factoring is the purchase of a company's accounts receivable in exchange for funding, as opposed to a bank loan using those receivables as collateral.

Q: Would a bank loan make more sense than factoring?
A: Bank credit lines may be adequate in some cases, but not always. Credit problems often prevent businesses and individuals from qualifying for bank loans. With factoring, the decision to provide you with money is based on the credit worthiness of the customers you have. Banks typically have a set of inflexible criteria such as:

Minimum 3 – 5 years in business.
2 – 3 years of positive cash flow.
Available assets at least equal to the loan amount.
Available personal assets equal to the loan amount.
Clean and strong credit history.

Because we at Vision Factoring only depend on the credit worthiness of your customers, not of you, our requirements may allow the accounts receivable to be purchased, when a typical bank would decline the application.

  

Q: What do you consider when quoting factoring rates?
A: Like other factoring companies in the industry, we look at several things. Some of the things we look at are the creditworthiness of the customers that you use, the average dollar amount of your invoices, the number of invoices that you will factor each month and the average number of days your debtors take to pay on the invoices.

 

Q: Can I just fax my accounts receivables to get paid?
A: If your customers accept invoices by fax, then you may fax. If your customer requires the originals then those have to be mailed to us.

Q: How soon can I get paid?
A: Within 12 – 24 hours from when we receive the original bill of lading and all applicable paperwork. We pride ourselves on our fast turnaround, and we believe you'll soon see that working with Vision Factoring is the easiest part of running your company.

Q: How do I get paid?
A: We can ACH/Direct Deposit or mail the money to you.

Q: Does Vision Factoring collateralize our accounts receivable?
A: First position is required as collateral on all accounts receivable that are factored, and a UCC financing statement will be filed to evidence it.

Q: How does Vision Factoring notify my customers of the factoring arrangement?
A: The invoices are stamped with a “remit to” address for payment and a “Notice of Assignment" letter is sent.

Q: Do we have to factor all of our accounts receivable?
A: You can select the accounts to factor and are able to maintain others in-house by direct billing. However, once you assign an account, you must factor all future invoices unless a release is provided.

Q: What if I want to stop factoring?
A: You can stop factoring at any time without penalty. You are not committed to use our service for any length of time. However, we cannot issue a release until all open accounts receivable for your company have been paid in full, or your account is purchased by another factoring company.

Q: Do you hold part of my money in reserve escrow?
A:Yes. 10% of your credit limit.

Q: What if an invoice is not paid?
A: If an invoice remains unpaid after a previously agreed upon term, you would simply exchange the invoice for another of comparable value.