FACTORING of ACCOUNTS RECEIVABLE

Who are best candidates?

  • Companies who are no longer eligible for conventional lines of credit
  • Must sell to good credits - business customers only
  • No encumbrances (existing debt must be paid off)
  • Companies who need working capital but want to avoid personal guarantees
  • Companies with high up-front costs coupled with long customer payment terms

Key considerations?

  • Factoring does not depend on a company’s cash-flow, profitability, business & personal credit and time-in-business.
  • Minimum volumes are usually $ 25,000 per month, maximum $ 5,000,000 per month
  • No Balance Sheet Debt - cancelable at any time
  • Company has option on which invoices to sell and when they are sold
  • Advance rates up to 93% of invoice amount
  • Can be paperwork intensive unless managed and standardized
  • Customers must be notified (risk of customer alienation and stigma is minimal)

Affordability? 

  • Becomes cost-efficient at $ 60,000 per month
  • No personal guarantees required.
  • No compensating balance requirement
  • No collateral audits
  • Use of a managed program can reduce costs significantly
  • No application fees or hidden charges
  • Mostly non-recourse (except in cases of outright fraud)
  • Using proceeds to pay creditors on discount can cut cost in half
  • Allows competitive advantage by enabling longer payment terms to customers

How long does it take?

  • 3 - 5 days, from submission of initial funding request and documentation.

What is a successful outcome?

  • Support or restoration of positive cash-flow

1395 Atwood Avenue  •  Suite 209E   •   Johnston, Rhode Island 02919 •  401-432-7700

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