Ozarks Capital Funding

One of the biggest objections I hear from potential invoice factoring customers is the cost.   They reason that if a bank loan is 9%, factoring fees should be comparable.   I usually start by saying that if a business can get the total amount of working capital they need from going to a bank, they should do it as long as they pay off the debt in a reasonable period of time.   With that being said,  comparing bank rates to factoring fees is like comparing apples to oranges.   Here’s why:

• Bank rates are typically based on an annual percentage, while factoring is based on monthly periods
• Factoring is the purchase of a company’s accounts receivable at a discount.  It is not a loan
• Factoring  companies typically offer other services to go along with the financing, such as credit screening for new accounts, professional collections, and  timely reports
• Start-ups usually qualify for factoring
• The credit of the individual owners is usally not a factor in qualification
• Unlike bank loans, personal guarantees are not required in a factoring relationship
• With factoring, collateral other than the receivables do not need to be pledged
• Accounts receivable factoring offers funding that is only limited by the company’s pool of receivables

As you can see, bank loans and invoice factoring are two different products.

Would you like a free factoring quote?  Click here or call us at (417) 849-7394.

Check out our new e-book, “Accelerate Your Cash Flow With Invoice Factoring”.  Click here.