FAQs
How soon can you issue a factoring proposal?
Typically a proposal can be issued withnh 24 hours after receiving your information.
If I am based in Hong Kong or outside the United States, would I be working with Hong Kong Factoring or Corporate Finance New York?
If you are based in Hong Kong or outside the United States, initially Corporate Finance New York will evaluate your funding request and may ask for additional information, if the funding request meets certain criteria for further consideration, you will then be working with our Hong Kong affiliate or the affiliate for your country. If you are based in the United States, you will be working with Corporate Finance New York.
Is accounts receivable funding a new financing option?
No.
Accounts receivable funding is
one of the oldest forms of
financing. It has been around
in one form or another for
more than 4,000 years. Until
the mid 1980s, most people
thought accounts receivable
funding was only used in the
textile and garment
industries. Today, accounts
receivable funding is a widely
used and viable financing
solution for all types of
businesses that extend credit
terms to their customers.
How can accounts
receivable funding help my
business?
By
providing an immediate source
of cash flow for your company.
You can use this cash to
provide working capital, meet
payroll, pay taxes, replenish
inventory, increase
advertising, purchase
equipment, improve your credit
rating, and more.
How is accounts
receivable funding from your
company different than accounts
receivable financing from a
bank?
When making a funding
decision, we focus on the
creditworthiness of your
customers while banks will
focus on your company’s
financial history and cash
flow. Plus, since accounts
receivable funding is not a
loan, there is no debt on your
company’s balance sheet. Best
of all, we will make a quick
funding decision, while banks
may take weeks—even months—to
approve a loan.
Will my company be
eligible for accounts
receivable funding if it has a bank loan or
line of credit?
If
a bank has a lien on your
company’s accounts receivable,
you should let us know right
away. We will ask the bank to
subordinate that lien in our
favor. Because this is a
common occurrence, most banks
will accommodate the request,
but we must know this
information in advance.
My company owes back
taxes. Can I still apply for
accounts receivable funding?
Yes, Tax problems are handled on a case-by-case basis. Please let us know immediately so that we can discuss the payoff of your back taxes or a lien subordination with the IRS.
What information will you need from my company to begin the accounts receivable funding process?
Along with the application, be
sure to include your company’s
most recent accounts
receivable and accounts
payable aging reports,
Articles of Incorporation or
DBA filing, a master customer
list and a sample invoice. For
startup companies, please also
submit a business plan and
projected sales forecast, and
an owner/officer history and
profile.
Which customers would
be good candidates for
accounts receivable funding?
Ideally, we would like to fund all of your customers, we require a minimum of 2-3 customers. First, we need their names, addresses, phone numbers and the amounts of credit desired. This will save you time when submitting invoices to us. Also, anytime you obtain new customers, send the same information to us, and we will check them out for you.
Can your company purchase only a portion of my company’s invoices?
Absolutely, but remember that higher numbers of receivables purchased on a regular basis can result in more competitive rates. Terms can be especially flexible when there are large numbers of invoices issued to a larger, rather than smaller, pool of your customers.
How long does it take to receive the first funding?
The initial funding can be as fast as a few short hours after approval and invoice veritication. If you wish, you can send your invoices to be funded with the signed contract. After the initial funding, your company can receive funds again within a few short hours after verification.
Are accounts receivable funding fees tax deducible?
Most accountants agree that accounts receivable funding fees are an expense and should be treated as such.
Do you verify invoices with my customers?
Invoice verification is an essential, and accepted, part of funding. Because factors verify invoices with customers, they can tell clients if there is a customer service problem right away. A non-factoring client may not notice the problem until the invoice becomes past due. By that time, it may be too late to save the account. For the process to run smoothly, we suggest that you call your customers or send them a letter in advance to let them know that you are now working with a factor. If you need assistance in writing the notification letter, we will be happy to provide you with a sample letter.
What should I do if my customer mistakenly sends the payment to my company?
This might happen, especially with the first invoice. If this occurs, the check must be sent to us immediately. Your company should never deposit invoice checks that were already purchased by the factor. We also ask that you notify your customer to pay us directly in the future.
What happens if my customer doesn’t pay the invoice?
This depends on whether your company entered into a non-recourse or recourse agreement with the factor. In a non-recourse agreement, the factor will absorb the credit-related loss. However, with a recourse agreement, your company will have to reimburse the factor—either by having the invoice deducted from the next advance or replace it with another collectable invoice.
How can I be certain that the factor will treat my customers well?
The last thing we want is for you to lose a customer. We are not a collection agency. We will never harass your customers for money. Maintaining your customers’ goodwill and confidence are of utmost importance to us!