Invoice Factoring

Making the Most of Your Finance Network With Invoice Factoring

07:46 24 March in Blog, Business Funding

Most small and mid-sized business owners know someone who offers financing options. When you are running a business, there are occasional times when keeping up with cash flow needs feels like an impossible hurdle to overcome. Companies understand how long it takes to apply for and gain approval for a traditional bank loan. Since your lines of credit are often needed to ensure you have materials for future orders, what other options do you have to get the cash you need quickly? Factoring is the answer — invoice factoring is one of the easiest and fastest methods of getting a quick infusion of cash into your business.

Tap Your Financing Network

If you are like most business owners, you either know someone who offers short-term financing, or you are working through a broker who handles short-term loans. If you are working with anyone who provides this type of financing, you should ask them about invoice factoring and how you can take advantage of it for your immediate needs.

What Factoring Can Accomplish

When you are facing a cash crunch because orders are fulfilled but unpaid, you may not know how to get the cash you need. Invoice factoring can help you meet your immediate cash needs without entering into debt you will have to repay later.

First, you decide which invoice or invoices you want to factor. Then you or your financial broker have those invoices vetted by a factoring partner and within a few days, you have the cash you need to meet your obligations.

The best thing about finding the right factoring partner is you retain a great deal of control over your accounts receivable. For example, if you decide to work with Capstone, you are not committed to factoring all of your invoices. You determine which invoices you want to use, we vet them, and we send you the agreed-upon amount upon approval. Yes, it is really that easy.

You do not need to continue to attempt to run your business from job to job. Instead, you can take advantage of factoring options and accelerate your cash flow starting today. Please email us at [email protected] or call us at 347-410-9697 and let us help you create a customized plan that enables you to reach your full potential.

 

invoice factoring partner

How Brokers Can Identify the Right Invoice Factoring Partner

07:19 13 March in Blog, Broker Resources

As a financial services broker, identifying the right partners is essential. Too often, brokers offer leads to providers of financing and find themselves on the outside looking in. Therefore, identifying capable and trustworthy invoice factoring partners early in your career is essential.

Most brokers are looking for an ongoing relationship that does not cost them future revenue; exceptional communication between the funding company and themselves; training when needed; and tools to help them maximize their business potential.

This model holds regardless of the amount of business the broker is referring and which products they need to meet the needs of their clients. That is why for years, brokers have learned to rely on Capstone.

Capstone Values Broker Relationships

If your business focuses on small companies and embraces minority-owned firms, you need a trusted partner. Your clients’ needs come before anything. You often seek opportunities to provide them with unique methods of obtaining the cash they need to keep their business functioning. Some of the ways Capstone demonstrates their commitment to broker relationships include:

  • Custom packages for your clients – every customer has unique needs and we will work with you and with your client to make sure we offer them a package that meets those needs.
  • Local services – regardless of where your client is located, we can help.
  • Regular commission checks – if we are doing business with your customer, you will get a regular commission check from us.
  • Training – you need never worry about any uncertainty with our products. We provide you with training, educational materials, and brochures, so you know which products you can safely offer.

If you are looking for a partner you can trust to help you grow your business by assisting your customers, today is the day to reach out to Capstone. Contact Capstone Capital Group today at (212) 755-3636 and see how we can enable you the opportunity to grow your own business while providing your clients with the financing they need to grow their businesses.

Merchant Cash Advance or Invoice Factoring

10:09 10 March in Blog, Business Funding

One of the options small businesses may turn to for financing immediate cash flow needs is a merchant cash advance (MCA). However, these cash advances can set off a devastating cycle of borrowing which can have catastrophic consequences for a business owner.

While a Merchant Cash Advance, (MCA) can help a business owner secure immediate financing, there are several pitfalls they should be aware of before opting for this type of financing. First, most MCAs are approved based on debit and credit card payments over a specific period. Secondarily, they can be very costly, with APRs (annual percentage rates) as high as triple digits.

MCAs Work But at What Cost?

While in the past all MCAs based advances strictly on debit and credit card transactions, more vendors are offering more flexible options which include all sales. Business owners would submit an application, the vendor will make a proposal to offer a certain amount of cash in advance and payment arrangement will be made. However, there’s more to this than meets the eye.

When using an MCA, the repayment terms typically mean the business owner will pay the advance through daily or weekly payments plus fees. The amount paid is generally based on various factors including the amount borrowed, plus the fees, plus the term of the MCA. Repayment is based on the amount of debit and credit card sales and is debited automatically from those sales. The predicament most business owners face is they have no control over the length of time it may take to repay the MCA — since it is based on new sales, this could mean it takes longer to pay the full amount. Remember, the longer repayment takes, the higher the APR. The other concern is the contracts may be confusing meaning your client may be signing something they do not fully understand.

Why Invoice Factoring Makes More Sense

For nearly every business owner, invoice factoring is a better option. There are several reasons for this including:

  • Easy to understand — contracts for accounts receivable financing are written in a manner which is clear to the customer. Business owners will be able to clearly review their terms and understand exactly what they are paying for fees.
  • Not based on future sales — rather than taking a chance on lower sales in the future, meaning longer repayment times, your clients are getting an advance on existing sales. This is good news because it means APRs are not higher, and they are not dependent on monies not yet earned to get the cash they need.
  • Different type of automatic payment — payments for factored invoice are made by the end client; the one who is paying the invoice. That means your client never has to worry about a weekly or monthly payment to pay back the advance they have received.
  • No impact on other sales — the only funds used to pay off the advance your client has received is the payment on the invoice they have factored. This makes sense because should there come a time when they have a need for additional cash, they can select other client’s invoices to factor.

While MCAs may be valuable for some clients, at Capstone, we believe invoice factoring is a more stable, safer option for nearly every client. Since repayment does not impact future sales, it also allows your clients more flexibility.

Capstone understands every business is different and may have different financing needs. That’s one of the many reasons we are here to offer a customized financial solution to help your client meet their immediate cash flow needs without impeding their future sales. Contact our offices today and let us see if we can help you find the best solution for your client. You can reach one of our highly-trained representatives at (212) 755-3636, you can contact us by email at [email protected] or you can fill out our simple to use online contact form. Let us help you drive your client’s growth and success.

 

Invoice Factoring

Understanding Invoice Factoring

18:42 20 May in Blog

Invoice factoring is a common practice that enables businesses to receive immediate payment in exchange for selling accounts receivables at a discount to their face value. Once an invoice is“ “Factored” and it is time for the customer pays for a product or service, the payment is forwarded to the factoring company. One of the most significant advantages of factoring is that businesses can receive immediate cash flow with no additional debt that appears on balance sheets.  Therefore Factoring is an off balance sheet transaction. Factoring can also be advantageous for businesses looking to obtain initial working capital without having to demand immediate payment from their customers.

The Invoice Factoring Process

Factoring is a rapid process that usually takes less than 24 hours to complete. The factoring process starts after a business delivers a product or service and sends an invoice to their customer. A copy of the invoice is then sent to the factoring company, which will purchase the invoice in exchange for an immediate cash payment. Most factoring companies offer up to 80 percent of the invoice value with the balance going into a reserve account. Once the purchase of the invoice has been completed, businesses can have the money, minus nominal fees, sent directly to their bank account.

Advantages of Factoring

Many businesses choose to use factoring because it can provide a predictable, immediate revenue stream than can be used to fulfill an order. While many businesses request prompt payment, they can rarely expect it in the real world. Even when discount incentives are offered, many customers will still choose to pay later. These problems can be especially challenging for newly established businesses that struggle to convince customers that they can deliver. Businesses that use factoring can receive immediate revenue without having to demand upfront payment or incur excessive risks.

Additional advantages of factoring with Capstone include:

  • Insurance against customers that fail to pay.
  • No penalties for failing to meet a minimum invoice sales volumes.
  • No contractual restrictions on how funds can be used.
  • Practically unlimited financing that scales with business growth.
  • Additional working capital with no additional debt.
  • Take advantage of supplier discounts by paying early.
  • Add more value to customers though attractive payment terms.

How Factoring Affects the Bottom Line

Factoring fees are an average of about two percent, which many business owners argue can add up to a lot of money in the long run. In reality, most businesses that use factoring can earn several times more than the factoring fees that they pay. Studies indicate that a majority of businesses can scale their production capacity by more than 25 percent without increasing fixed costs. Since limited capital is the primary constraint for most businesses, immediate payment can enable businesses to operate at full capacity and earn several times more than the factoring fees.

Business Requirements for Factoring

As with any other credit service, businesses will need to be pre-qualified. Factoring services are only available to legal business entities that sell business-to-business services to governments or other companies. Businesses will need to have customers with good credit to qualify for a factoring service.   It is also important to have no outstanding invoice leans. Most businesses that meet these basic requirements can be approved to take advantage of invoice factoring services.

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