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andrea “The Factoring Expert” rogers
A Very Unique Factoring Company
A Very Unique Factoring Company
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1. How can your invoice factoring services help my business?
 “What would you do if you had access to cash immediately instead of having to wait 30, 60, 90 days, or longer to receive payments from your customers?”

“Did your bank reject your loan application or require you to pledge additional collateral that you did not have?”.
 “Have you ever missed out on a significant growth opportunity because your cash flow is slow?”
If the Answer is YES to any of these questions, “Well then, I think factoring is a good option for your business.”

2. What is invoice factoring?
In a nutshell, invoice factoring consists of converting a company’s accounts receivable into cash by selling invoices to a factor at a discount. Factoring is a valuable financing option for companies who are just starting out or who are experiencing a period of rapid growth. Because invoice  factoring companies rely on being paid by your customers, your  own financial history does not have any bearing on your qualification. Most importantly, factoring allows your company to stop worrying about cash flow and start focusing on what really matters in a business — operating it.

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OCF.com Factoring Company Website. OCF serves businesses nationwide.
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Factoring Companies Secrets You Need To Know

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How a Factoring Company works. This video explains how.

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Factoring Provides Alternative Source of Working Capital
by Andrea Rogers
 
Whether you are a machinist operating out of a garage or a staffing company placing hundreds of workers in the largest Northwest firms, you undoubtedly face cash flow dilemmas from time to time.   The uncomfortable ritual of making incoming cash receipts stretch to cover short term obligations frustrates even the most seasoned business managers.
 
In recent years, an increasing number of businesses have discovered that factoring accounts receivable can combat the ups and downs of unpredictable cash flow cycles.  More importantly, factors are providing the small business community with a viable source of working capital when conventional financing is not always an option.
 
Currently, $ billions dollars in invoices are factored in the United States each year.

 
Historically, the bulk of factoring was predominately in the textile, furniture and apparel industries.  Today, factoring firms are working with all types of industries, including: manufacturers, service providers, transportation companies and high technology firms.  Locally, as growing Puget Sound firms continue to prosper, suppliers and contractors are looking for additional sources of working capital to accommodate increased sales volume. 
 
The overall increase in factoring volume is mainly attributed to the credit crunch in the late 80s.  As the availability of bank commercial credit tightens, more businesses look towards alternative sources of financing to achieve growth. 
 
Factors can help those firms that banks often find difficult to approve such as start-up companies whose growth outstrips cash.  The primary focus in a factoring relationship is the credit-worthiness of the customers being invoiced and the client’s ability to produce a quality product or service.   Simply put, if the business has an acceptable product or service that it provides to a creditworthy customer then the business is a candidate for factoring.
 
The fact is that most companies share a common dilemma during periods of rapid growth of incoming orders draining cash flow.  Factoring not only provides immediate cash but, efficient businesses also use it as a tool to increase profit margins:
1.    Take Advantage of Early Payment  Discounts - Having access to cash enables businesses to save on average 2% by taking advantage of early payment terms offered by suppliers.  The points saved by reducing raw materials costs helps to offset the factoring fee. 
2.    Take Advantage of Volume Discounts - Having cash also enables businesses to buy raw materials in greater volume.  This saves money and directly impacts the bottom line.
3.    Reduce Late Payment Penalties and Interest Charges - Having immediate cash on hand to pay current obligations as they become due eliminates late charges from suppliers and other creditors. 
4.    Meet Obligations on Time - Paying vendors on time helps to establish a solid credit track record and allows for increased future credit limits from vendors as well as financial institutions.
5.    Offer Credit Terms to Customers - Offering credit terms to customers is a common way to increase sales by making it “easier” for customers to buy.  Having financial backing to carry accounts receivable is essential if a business wants to be able to follow through on its commitments.  Reputable factors encourage “managed” growth by consulting with clients regarding exposures and other risks when taking on new credit accounts.
 
The difference between factoring and other sources of financing is that the factor actually purchases and tracks commercial invoices.  In addition to providing immediate cash on invoices, the factor performs valuable credit analysis on new and existing customers and conducts professional, routine follow up on invoices as they become due.  
 
For the business manager who spends a good portion of the day collecting, bookkeeping and searching for capital, the entire factoring package offers peace of mind.  The manager can actually focus on important aspects of the business that are often pushed aside, such as marketing and production.
 
Depending on the agreement, businesses can pick and choose which invoices they wish to sell to the factor, who immediately advances eighty percent or more of the face value of the invoices.  The balance of the funds, less the discount fee, is released once the invoice is collected.  
 
The cost of doing business with a factoring company is the discount taken on the invoices submitted for funding.  Fees range from 1 to 10 percent, depending on volume, credit-worthiness of the customers sold and overall risk.  The discount taken is best compared to a merchant accepting a Visa or MasterCard transaction and receiving immediate payment, less a percentage or discount, before the actual cardholder has paid his or her monthly statement. 
 
Setting up a factoring relationship is quick and easy in comparison to other forms of financing.  Applications simply call for basic company information and a customer list.  Years of profitability are not required which makes factoring an option for startups generating receivables.  It is possible that funding can occur in as little as a couple of days after the receipt of the application and invoices.
 
Each factor operates slightly different.  It is important to understand which programs  provide the greatest benefits and at the least cost. Several criteria should be addressed  when searching for a reputable factor.   Are there setup fees, maintenance fees or penalty fees? Is there a long term contract? Are there monthly minimums? Does the factor provide credit and collection services at no additional charge? What accounting reports will the factor supply?  What value-added services does it provide? 
 
Most business bankers are a good referral source for reputable factoring companies.  Bankers refer to factors because they realize that although the customer may not be bankable at the time of the referral, in a short time it could be a viable candidate for conventional financing. As a short term financing solution, factoring relationships generally run from 6 months to a couple of years.   
 
Businesses choosing to maintain momentum, despite a lack of conventional financing options, find that factoring not only offers cash but also a stable foundation on which to build. They look to a future of managed growth and profitable performance that will bridge the gap to qualifying for bank financing.  
______________________________________________________________________
Andrea Rogers is the Business Development Manager for Olympic Credit Fund, Inc.  Olympic Credit Fund is a factoring company based in Olympia Washington and serves small businesses nationwide.   If you have questions about factoring you may call Andrea at (888) 266-0197.
 
 
Factoring Provides Instant Cash and More
 
 
by Andrea Rogers
 
Whether you are a machinist operating out of a garage or a staffing company placing hundreds of workers in the largest Northwest firms, you undoubtedly face cash flow dilemmas from time to time.   The uncomfortable ritual of making incoming cash receipts stretch to cover short term obligations frustrates even the most seasoned business managers.
 
In recent years, an increasing number of businesses have discovered that factoring accounts receivable can combat the ups and downs of unpredictable cash flow cycles.  More importantly, factors are providing the small business community with a viable source of working capital when conventional financing is not always an option.
 
Currently, $62 billion dollars in invoices are factored in the United States each year.
In the last 10 years, according to Mace Edwards, of the Edwards Research Group in Newton, Massachusetts, the volume of invoices factored has increased by $10 billion dollars.
 
Historically, the bulk of factoring was predominately in the textile, furniture and apparel industries.  Today, factoring firms are working with all types of industries, including: manufacturers, service providers, transportation companies and high technology firms.  Locally, as growing Puget Sound firms continue to prosper, suppliers and contractors are looking for additional sources of working capital to accommodate increased sales volume. 
 
The overall increase in factoring volume is mainly attributed to the credit crunch in the late 80s.  As the availability of bank commercial credit tightens, more businesses look towards alternative sources of financing to achieve growth. 
 
Factors can help those firms that banks often find difficult to approve such as start-up companies whose growth outstrips cash.  The primary focus in a factoring relationship is the credit-worthiness of the customers being invoiced and the client’s ability to produce a quality product or service.   Simply put, if the business has an acceptable product or service that it provides to a creditworthy customer then the business is a candidate for factoring.
 
The fact is that most companies share a common dilemma during periods of rapid growth of incoming orders draining cash flow.  Factoring not only provides immediate cash but, efficient businesses also use it as a tool to increase profit margins:
Take Advantage of Early Payment  Discounts - Having access to cash enables businesses to save on average 2% by taking advantage of early payment terms offered by suppliers.  The points saved by reducing raw materials costs helps to offset the factoring fee. 
Take Advantage of Volume Discounts - Having cash also enables businesses to buy raw materials in greater volume.  This saves money and directly impacts the bottom line.
Reduce Late Payment Penalties and Interest Charges - Having immediate cash on hand to pay current obligations as they become due eliminates late charges from suppliers and other creditors. 
Meet Obligations on Time - Paying vendors on time helps to establish a solid credit track record and allows for increased future credit limits from vendors as well as financial institutions.
Offer Credit Terms to Customers - Offering credit terms to customers is a common way to increase sales by making it “easier” for customers to buy.  Having financial backing to carry accounts receivable is essential if a business wants to be able to follow through on its commitments.  Reputable factors encourage “managed” growth by consulting with clients regarding exposures and other risks when taking on new credit accounts.
 
The difference between factoring and other sources of financing is that the factor actually purchases and tracks commercial invoices.  In addition to providing immediate cash on invoices, the factor performs valuable credit analysis on new and existing customers and conducts professional, routine follow up on invoices as they become due.  
 
For the business manager who spends a good portion of the day collecting, bookkeeping and searching for capital, the entire factoring package offers peace of mind.  The manager can actually focus on important aspects of the business that are often pushed aside, such as marketing and production.
 
Depending on the agreement, businesses can pick and choose which invoices they wish to sell to the factor, who immediately advances eighty percent or more of the face value of the invoices.  The balance of the funds, less the discount fee, is released once the invoice is collected.  
 
The cost of doing business with a factoring company is the discount taken on the invoices submitted for funding.  Fees range from 3 to 9 percent, depending on volume, credit-worthiness of the customers sold and overall risk.  The discount taken is best compared to a merchant accepting a Visa or MasterCard transaction and receiving immediate payment, less a percentage or discount, before the actual cardholder has paid his or her monthly statement. 
 
Setting up a factoring relationship is quick and easy in comparison to other forms of financing.  Applications simply call for basic company information and a customer list.  Years of profitability are not required which makes factoring an option for startups generating receivables.  It is possible that funding can occur in as little as a couple of days after the receipt of the application and invoices.
 
Each factor operates slightly different.  It is important to understand which programs  provide the greatest benefits and at the least cost. Several criteria should be addressed  when searching for a reputable factor.   Are there setup fees, maintenance fees or penalty fees? Is there a long term contract? Are there monthly minimums? Does the factor provide credit and collection services at no additional charge? What accounting reports will the factor supply?  What value-added services does it provide? 
 
There are approximately fifteen factoring companies in the Puget Sound area who service accounts locally.  Most business bankers are a good referral source for reputable factoring companies.  Bankers refer to factors because they realize that although the customer may not be bankable at the time of the referral, in a short time it could be a viable candidate for conventional financing. As a short term financing solution, factoring relationships generally run from 6 months to a couple of years.   
 
Businesses choosing to maintain momentum, despite a lack of conventional financing options, find that factoring not only offers cash but also a stable foundation on which to build. They look to a future of managed growth and profitable performance that will bridge the gap to qualifying for bank financing.  
 
 
______________________________________________________________________
Andrea Rogers is the New Business Development representative for OCF.  OCF is a factoring company based in Olympia with business development offices in Seattle and Vancouver / Portland metro area and Nationwide.  If you have questions about factoring you may call Andrea at (888) 888-0197.

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