Ozarks Capital Funding

I was on a Webinar with a factoring company I work with last night and representatives of this group confirmed what I already knew: invoice factoring volume is growing at a rapid rate this year. In fact, they said this was by far their best year ever and they’ve been around since 1993.

The reason I wasn’t surprised was because accounts receivable factoring is not a loan. Thus, companies that use it don’t have to apply for the service like they would with a bank line of credit. Excellent credit scores of business owners aren’t important to us. Although we usually require financial statements to be submitted with the application, it’s normally just a way for us to see if the company is in “survival mode”. Personal guarantees on the part of the owners aren’t required, as would be the case with a bank loan.

“But Isn’t factoring an expensive way to acquire working capital?” That’s a question i’m asked all the time. Yes, it is more expensive than bank loans. But the financing is only limited by the amount of receivables on the books. Also, the key decision point is whether or not the company is better off with or without factoring. In many cases, NOT factoring is a lot more expensive than doing it.

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