Factoring 101

Call Apex, Let's Talk

What’s the Apex difference? Honesty and integrity are just as important as the freight bills we buy. Your success is our success and we provide the tools, resources and people to create the difference between survival and ultimate growth. Our product is different. Our culture is different. That’s the Apex difference.

We are proud that more than half of Apex’s business comes from referrals. Why? We provide consistent value to our clients.

General Factoring Information

What is a factoring company?

A commercial finance company that specializes in the purchase of invoices or accounts receivable for cash.

How does factoring differ from bank funding?

  • Factors make funding decisions based on the credit-worthiness of your customers; a bank makes a credit decision based on your company’s financial history, cash flow and collateral.
  • Factoring is not a loan. No liability appears on your balance sheet.
  • A factor makes funding decisions in days or hours – while a bank may take weeks or even months.
  • A reliable factor will also provide a personal account executive to assess risk and manage your account and quality credit information to check credit on your customers.

Why would a company sell accounts receivable?

Companies that need cash now to meet immediate financial demands such as payroll and fuel expenses often can’t afford to wait 30, 60, or even 90 days to get paid. Factoring helps provide this cash by funding the purchase of accounts receivable, often within 24 hours.

What companies benefit most from factoring?

Factoring works well for companies just starting out as well as established companies anticipating growth. We view every client’s circumstances as an opportunity to create a flexible, dynamic solution.

How will your customers be treated by Apex?

Apex collects from your customers in a professional and courteous manner. Due to our long history in the trucking industry, we have valuable relationships with many of the people you already haul for.

How much does factoring cost?

Factoring rates vary depending on specific circumstances including the credit-worthiness of your customers, your average invoice size, average payment cycle and factoring volume. The cost of factoring is outweighed by its significant benefits: access to immediate cash and a large network of industry experts, credit check analysis, collections, freight bill auditing and reporting.

What is the difference between “Recourse” and “Non-Recourse” factoring?

“Non-Recourse” factoring is when the factor takes the credit risk of the client’s customers, which protects the client from credit loss.

“Recourse” means the client is ultimately responsible for payment, regardless of whether the client’s customer pays. At Apex, we offer both “Non-Recourse” and “Recourse” factoring.

When is factoring not a good fit for your business?

  • Your business has significant cash reserves free of cash-flow concerns.
  • Your business sells almost entirely too less than credit-worthy customers.
  • Your business has a significant amount of accounts receivable already overdue.
  • Your business operates on low margins.

How much money can I get from factoring?

  • We typically advance between 80 – 90% of your receivables immediately, and the balance (minus our fees) when invoices are paid.
  • For example: if you have $100,000 in accounts receivable, you could immediately get up to $90,000 in working capital. The balance due to you of $10,000 (minus our minimal fees) will be paid to you when your customers pay the invoice.

Factoring and Your Customers

Will my customers think I’m in financial difficulty if they find out I’m factoring?

Definitely not! Factoring is a viable financing option for many businesses. Hire a reputable and professional factor and your customers will understand that you are creating cash flow for your business. We work with over 35,000 companies that are accustomed to dealing with factors.

If my customers know that their invoices are factored, will they take longer to pay them?

No. More often than not, it’s just the opposite. If your customer is a large corporation with its own invoice-payment policy, it will make no difference who the creditor is. If your customer is a smaller company, they will be inclined to pay faster knowing that we are a prime reporter of credit information and an influential credit-reference resource.

How will my customers know where to send the payment?

When you factor with Apex, we send a notification letter to your customers identifying us as your funding source and request that all payments be sent to us. Every invoice is audited before we send it to your customer to ensure that each invoice includes Apex’s address for payment.

The Factoring Process

What type of businesses does Apex factor?

Apex factors freight bills. Apex has been factoring for trucking companies for since 1995 and provides the tools you need to compete in the industry.

How long does the factoring process take?

Initial funding can take anywhere from 24 hours to a couple of days to complete depending on the receipt of documents. Once funding is set up, and pending your preference and arrival/status of paperwork you can be funded the day you send in bills or the day after.

What other services are provided by Apex?

  • Personal Account Executive – As an Apex client you are designated a personal account executive knowledgeable in the industry to provide you with strong support and help you manage your factoring account.
  • Credit Checks – We have the most reliable and accurate credit check system of any factor available to you 24/7. Apex uses multiple credit resources to ensure that you have all the information you need to make informed business decisions.
  • Professional Collections: Apex collects from your customers in a professional and courteous manner and utilizes already established relationships with many of the people you already haul for.
  • Reporting – At Apex, we fully disclose all account activity and provide full accounting details on your account. Reports include: invoice aging, reserve account, payment history, purchase and advance, credit lines, and personal account management.
  • 24/7 Online Account Access – You may log into your account at any time to run credit checks, run reports on the status of your account, check funding status, find information about each debtor, invoice, and payment.
  • Fast Funding – As sales increase, more cash becomes available for you to use, which allows you to constantly meet demand. Get funded in 24 hours.
  • Technology – We are constantly upgrading our systems to provide you faster, efficient, and more reliable services.
  • Freight Bill Auditing – Each time an invoice is submitted we audit the invoice for accuracy and all payment information.

Does Apex require additional collateral when my company is factoring?

Never. We only require a first position on accounts receivable. Beware: Many factors require an additional security interest in other assets of your company.

Do I need to factor all my invoices?

No. You decide which invoices you want to submit for factoring to help successfully manage your financial needs. To avoid payment confusion, we do require you to factor all invoices of any particular shipper/broker if you decide to factor any invoice of that customer.

How long must I factor my invoices?

With Apex, you don’t have to sign a long-term contract. It is not required in order to factor with Apex.

Who is responsible for collections?

We have a very professional team of collectors to do this for you. We take care of this for you at no charge, so you can pursue the growth of your business.

How will I know the status of my factored invoices?

We have just upgraded our online account management system. The new system allows you to securely access your complete account history in real-time, via the Internet, 24/7. You may view all aspects of your account including, but not limited to: invoice aging, reserve account, payment history, purchase and advance, concentration, and many more.

What reports does Apex provide?

Below is a list of the available reports. Some may be sent to you automatically via fax or email.

Automated Reports:

  • Purchase and Advance
  • Reserve Report
  • Payment History
  • Debtor Aging
  • Debtor Concentration