Factoring Best Practices
At Apex, we believe in being up front, open, and honest. We want to
see our clients succeed and believe education is the foundation to
success.
Did you know 49% of Apex's business comes from current client
referrals? Our clients value the service we provide. We have the best
credit reporting in the industry, trucking industry experts on staff,
and custom tailored rate plans to fit any business size. It's the Apex
Advantage.
See below for more information about factoring.
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. Because
factoring is not a loan, no liability appears on your balance sheet.
Also, 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 and a quality credit check
system.
Why would a company sell accounts receivable?
-
Companies with recurring cash-flow problems often can't afford to
wait 30, 60, or even 90 days to get paid. They need cash now to meet
immediate financial demands such payroll and fuel expenses.
Factoring helps provide this cash by funding the purchase of
accounts receivable, often within 24 hours.
What companies benefit most from factoring?
-
Each situation is unique. We view every client as an opportunity to
create a flexible, dynamic solution. Factoring works well for
companies just starting out as well as high-growth companies.
How will our customers be treated by Apex?
-
Apex collects from your customers in a professional and courteous
manner. Because of our long history in the trucking industry, we
have valuable relationships with many of the people you already haul
for, making the whole process seamless.
How much does factoring cost?
-
Rates are based on individual and specific circumstances. Factoring
rates depend on the credit-worthiness of your customers, your
average invoice size, average payment cycle, factoring volume, and
so on. In general, the cost of factoring is outweighed by its
significant benefits; access to immediate cash, 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.
When an invoice is factored with "Recourse", it 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 to less than credit-worthiness
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 you 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 customer pays the invoice.
What can I do with the additional cash I receive from factoring my
receivables?
-
You can use the additional cash to meet payroll, satisfy operating
costs, purchase needed inventory or equipment or just establish good
credit for future expansion.
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 and has been around for many centuries.. As long as it is
handled in a professional manner, your clients will understand
you're doing what's necessary to create 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, as a Factor, 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. We spend considerable amount of time
verifying receipt of this letter.
The Factoring Process
What type of businesses does Apex factor?
-
Apex only factors for the trucking industry. Because we specialize
in factoring for trucking, we provide the tools that greatly
diminish the time needed for complying with what seems like an
endless list of government rules and regulations.
How long does the process take to get factored?
-
Within 24 hours of receiving your basic company information, we'll
send you a proposal. If it's accepted by you, we conduct due
diligence and complete all documentation. Initial funding can take
anywhere from a couple days to 24 hours. It will all depend on how
fast you get documents and signed agreements to us.
What other services does Apex provide?
-
Professional collections - Apex collects from your customers in a
professional and courteous manner. Because of our long history in
the trucking industry, we have valuable relationships with many of
the people you already haul for, making the whole process seamless.
-
Credit Checks - We have the most reliable and accurate credit check
system of any factor. We use world-wide renowned credit check
systems to ensure you're doing business with companies that pay on
time, every time.
-
Personal Account Executive - Once your application has been
approved, you are assigned a personal account executive to guide you
along the way. If you need a last minute credit check or a payout of
your reserve, your account executive will be there for you. They are
knowledgeable in the industry and can provide you with strong
support for your factoring needs.
-
Reporting - At Apex, we fully disclose all account activity and
provide full accounting procedures 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 transactions.
-
Freight Bill Auditing - Each time and 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. Many
factors may take an available security interest in other assets of
your company. Watch out for this.
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.
How long must I factor my invoices?
-
Apex does not have a long term agreement. You may stop factoring at
any time.
Who is responsible for collections?
-
We encourage you to actively participate in the collection process,
however 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
growing 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?
Can you supply me with references from existing clients?
How do I receive the money from my factored invoices?
Wire - usually posted to your account within a few hours and funds
are available immediately
ACH (Direct Deposit) - Takes 48 hours to post to account once
initiated
Check - Bank may place hold on funds after check has been
deposited
Comcheck - Can be used for fuel, repairs, cash or deposited.
Maximum amount is $2,999.99 each
Top 10 Questions You
Must Ask Your Factor
-
What is the fee schedule for 31-90 days?
-
Are there any application or administration fees?
-
When are reserves released?
-
Do you specialize in transportation?
-
Do I have to sign a long term contract?
-
Is there a penalty if I don't meet the minimum?
-
What type of online reporting is available?
-
What reports and schedules will I receive?
-
How do you handle collections?
-
Can I have a list of referrals?
|
