Traditional Factoring

This is an ideal solution for companies that are growing quickly, have seasonal work, or need extra cash flow to purchase inventory, make payroll or invest in marketing. You are able to create an immediate influx of cash based on the invoices already on your books. The finance provider – or the ‘factor’—purchases all of your accounts receivables and advances you 70% to 90% of the total amount within 24 to 48 hours. The factor pays you the remainder of what you’re owed once your client pays the factor– usually 30 to 45 days later. It deducts a small fee, based on the size and age of each invoice.

Spot Factoring

Small business owners opt for this form of factoring when they do not want to factor all of their invoices. Typically, businesses will want to spot factor when they don’t need a steady flow of cash or have varying gross margins where it does not make sense to factor. Unlike traditional factoring, where the company turns over all invoices, spot factoring is available on an as-needed or one-time basis. This flexibility comes at a premium, but often makes sense if you have one client that is particularly slow or if a consistent flow of capital is not needed.

Export Factoring

Export factoring works for companies that want to offer terms to international customers but still want to receive cash when the goods are delivered. The “factor,” or a finance company, purchases the receivables owed you and forwards payment, usually 70% to 90%, once it has the receivables documentation. The client pays the factor, not you, once it receives the goods. The factor deducts a small fee when it receives the balance on the invoice and returns the rest of the money to you.

This solution speeds up the payment for exporting products dramatically. It also gives small and medium-sized companies a smart way to outsource overseas credit checking and debt chasing liabilities. Since everything is carried out locally, it avoids other potential administration costs and difficulties associated with overseas financial transactions.

Recourse Factoring

This type of factoring works best when you are doing business with financially healthy clients. It is similar to Traditional Factoring except you agree to buy back the invoice of any client that refuses or is unable to pay (due to bankruptcy). Or, you choose to exchange it with another invoice of equal or greater value. In return, the recourse factor offers a lower fee because it assumes less risk.

Non-Recource Factoring

With Non-Recourse factoring the risk of insolvency and non-payment is transferred to the Factor. The Factor cannot come back to you for payment if the customer goes bankrupt. The factor is not required to cover invoices that are disputed. This form of finance is appropriate when minimal risk is preferred over lower fees.

Freight Bill Factoring

This form of finance turns your freight bills into cash. Rather than waiting for payment, transportation companies forward their invoices to a factor which, in turn, advances funds to your trucking company. Factoring is widely used in the transportation industry so there are many competitive options for you to consider. For example, some factors will forward a large percentage of cash up front for a higher fee and then keep the remaining amount of the invoice. Others will advance a relatively small amount of cash up front, and then pay the remainder, after deducting only a small fee once the factor collects on the total invoice. CashFlow Direct will look at your individual business needs and recommend a factor that best suits your situation.

Construction Factoring

Construction finance offers sub-contractors and general contractors access to quick cash from your invoices so you can get the funds you need to start your next project. The financier (factor) purchases construction invoices and advances a percentage—often within 24 hours—then collects the funds and forwards the remainder of the invoice to you, less a factoring fee.
Few factoring firms work with the construction industry, but at CashFlow Direct we have direct lines into those that do. We will help you find the financial partner that will provide the best solution for your company’s particular situation.

Government Receivables Factoring

Winning a government contract is an exciting moment for any business, but these types of accounts don’t always pay quickly, which can limit your ability to take on new orders or fulfill new contracts. Government Receivables Factoring provides cash, usually within 24 hours of submitting your government invoices to a factor.

This solution works for any business suffering from cash flow shortages due to slow-paying government bodies.

Medical Services Factoring

Medical Services Factoring fills the cash gap inherit in working with third-party payers, such as an insurance company, Medicare or Medicaid. It gives you quick access to funds to pay bills, payroll, and buy equipment. With this form of finance, you perform a service and send the invoice to the factor. The factor then forwards a percentage of the invoice to you. After the factor collects the invoice from the debtor, you receive the remaining amount on the invoice, less a factoring fee.