What is Discount factoring?
Discount Factoring is a purchase of your accounts receivables by the Factor when providing advances (cash) after you ship. The advance rate is typically 80% of eligible accounts receivables and the remaining 20% is available to you after the Factor collects the receivables, less the Factor's fees.
What is the difference between recourse and non-recourse factoring?
In Non-Recourse Factoring, the Factor checks the credit worthiness of your customers and assumes the credit risk of nonpayment for any financial reason. In Recourse Factoring, the Factor attempts to collect your accounts receivable, but you are responsible for the credit risk if the customer does not pay the invoice.
What is Collection Factoring?
This is similar to Non-Recourse, Discount Factoring, except you sell your accounts receivable to the Factor and the Factor remits payment to you weekly, after your customer pays the Factor.
What is Asset-based Lending?
Asset-based lenders provide revolving lines of credit secured by your receivables and inventory. You maintain ownership of your receivables, investigate the credit worthiness of your customers and handle the collection of your receivables.
What is Purchase Order Lending?
Purchase Order financing provides the capital needed to produce your orders, typically by issuing Letters of Credit to your suppliers. Purchase Order lenders will finance up to 100% of your order for credit worthy customers.
What are Letters of Credit?
Letters of Credit are a commonly used internationally for the guarantee of payment and are issued to your vendor when importing goods. These instruments can be provided by a Factor.
How much does Factoring Cost?
Factors typically take a discount from each invoice to service and collect the receivable. Interest is charged for the cash advance in
How much does Asset Based Lending cost?
An asset-based lender will charge an annual credit line fee and an interest rate for the funds advanced against your accounts receivable and/or inventory.
How much does Purchase Order financing charge?
A Purchase Order financing company charges a percentage of the amount of the financing (Letter of Credit) for each 30 days the Letter of Credit is in place. The fee can range from a few points or more.
What is the term of a factoring contract?
Typically, 1 or 2 years