From time to time, you really get to help a business on a deal you really feel great about. Just had one of those today that I want to tell you about. I was able to put together an AR Factoring deal that solved all the problems at hand in regards to cashflow.
In this scenario, my client is an industry service provider for the major companies in the Telecommunications Industry. They are going through some changes in technology right now in their industry My client has been able to elevate himself as a preferred supplier by the Telecom Companies and he has been awarded some significant contracts.
On the outside looking in it looks like a great success story, right? Consider this. Now he has to hire more staff, more equipment and travel more. The terms of collection are net 60 so it will be 2 months before he gets paid for services rendered today. He has to pay for supplies net 30 and the employees are to be paid bi-weekly.
As I mentioned, this type of issue is not an uncommon one. If a company has a major sales increase, and they sell on terms, it is very easy to get into an overexposure situation when you do not have adequate financing. When he visited the bank, the answer was a quick, no ” I am sorry I can not help you.
Problem: The Bank will not give him a Business Loan because his financials are not strong enough over the last couple of years and his credit is not that strong.
Thankfully, we have a financial tool called Small Business Factoring. With this financing, the owner now has access to 85% of the invoice face value within 24 hours of the invoice being raised. Once the customer pays the invoice, the company will be able to get the money returned, less the finance fee..
The deal came to me on Tuesday and Legal docs were issued on Friday then the funding took place on Mondaynot even 1 week from application to funding.
Tags: a r factoring, accounts receivable factoring, accounts receivable financing, commercial factoring, commercial liine of credit, discounting factoring, Finance, invoice factoring, Line of Credit, receivable financing, small business factoring