A recent article in the New York Times titled: “When Banks Won’t Lend, There are Alternatives…”, by Ian Mount states that “The days of yesteryear when you could go to your corner bank are over” and “Small, emerging, growing businesses have few traditional sources to turn to. You have to get a little creative”. One of the types of financing highlighted in this article is Asset-Based Lending, a broad term which include accounts receivable factoring. This type of financing is based on a company’s selling their receivables, or invoices, to a factoring company, which gives the company selling their invoices funds immediately. Most of our clients use this type of financing as a means to finance short to medium term financial needs: finance new projects, providing funds when customers are paying slower and suppliers are demanding earlier payments, etc. They are using this financing for interim purposes until they can move to more traditional funding. We work with them to make sure that they are able to profitably utilize this short to medium term financing solution.
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How is invoice factoring different than a loan from a bank?
Factoring is the purchase of a company's accounts receivable as opposed to a loan that creates debt on the balance sheet. Accounts receivable funding is not a loan, therefore provides you with less debt on your company's balance sheet. How long does it take to receive funding? Initial funding takes between 1-3 business days after we receive your signed contract. Subsequent funding is usually received within 24 hours after verification. What will my customers think? Factoring is very common and most customers realize that growing companies require more working capital than traditional banks will provide. It's very likely that your customers have already worked with a factor in the past as it has become very acceptable. I have a previous bankruptcy, is funding still an option? Yes, even if you have credit problems or a past bankruptcy. My company owes back taxes. Can I still apply for funding? Yes, tax problems are handled on a case-by-case basis. Let us know immediately so that we can discuss the payoff of your back taxes or a lien subordination with the IRS.
Factoring is the purchase of a company's accounts receivable as opposed to a loan that creates debt on the balance sheet. Accounts receivable funding is not a loan, therefore provides you with less debt on your company's balance sheet. How long does it take to receive funding? Initial funding takes between 1-3 business days after we receive your signed contract. Subsequent funding is usually received within 24 hours after verification. What will my customers think? Factoring is very common and most customers realize that growing companies require more working capital than traditional banks will provide. It's very likely that your customers have already worked with a factor in the past as it has become very acceptable. I have a previous bankruptcy, is funding still an option? Yes, even if you have credit problems or a past bankruptcy. My company owes back taxes. Can I still apply for funding? Yes, tax problems are handled on a case-by-case basis. Let us know immediately so that we can discuss the payoff of your back taxes or a lien subordination with the IRS.
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