Frequently Asked Questions about Accounts Receivable Factoring
Today, accounts receivable factoring is a widely used and viable financing solution for all types of businesses that extend credit terms to their customers. Businesses most frequently factor in order to finance sales growth. Additionally, many companies turn to factoring as a bridge to future debt or equity financing.
1. What does Continuous Cash Flow offer?
2. How does it work?
3. What are the most common reasons why businesses turn to factoring?
4. Who may benefit from Continuous CashFlow?
5. Can Continuous Cash Flow purchase only a portion of a company's invoices?
6. What industries do not qualify for factoring with Continuous Cash Flow?
7. How is accounts receivable factoring different than commercial lending?
8. How does a commercial business become a reasonable factoring prospect?
9. Can accounts receivable factoring still be an option if a company is considering bankruptcy?
10. What information is needed from a company to begin the factoring process?
11. Does Continuous Cash Flow verify invoices from clients customers?
12. How long does it take to receive the first factoring advance?
1. What does Continuous Cash Flow offer?
We offer spot factoring, discount factoring and other types of recourse factoring. Our factoring programs are tailored to compliment the unique needs of our clients businesses. We also provide such critical A/R support services as customer credit analysis and approval, invoice handling, collection, posting, accounting and reporting.
2. How does it work?
Since factoring involves purchasing an invoice, a product or service needs to be delivered and an invoice created.
3. What are the most common reasons why businesses turn to factoring?
Besides offering working capital and liquidity, our program allows a company to:
- Meet any financial obligation
- Purchase inventory to meet increased sales demands
- Increase marketing efforts
Another benefit, factoring does not add debt to your balance sheet.
4. Who may benefit from Continuous CashFlow?
All businesses in need of working capital who:
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Are growing and need debtless capital |
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Are entrepreneurs that are unable to obtain a loan from their bank |
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Are seeking to improve or stabilize cash flow |
When making a factoring decision, we focus on the creditworthiness of your customers.
5. Can Continuous Cash Flow purchase only a portion of a company's invoices?
There are no minimum requirements that need to be met. Flexibility is one of the advantages of working with our factoring program. However we do require that invoices are not aged beyond 30 days.
6. What industries do not qualify for factoring with Continuous Cash Flow?
We serve ALL
industries that extend or want to extend credit to their customers. The industries not served are:
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Fresh produce and other agricultural commodities |
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Trucking/transportation |
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Third-party medical receivables payable insurance companies, Medicare and Medicaid. |
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Construction and building trades |
7. How is accounts receivable factoring different than commercial lending?
Factoring differs from commercial lending because it involves a transfer of assets rather than a loan of money. In assessing risk, therefore, we look primarily to the quality of the asset being purchased (i.e. the ability to collect client receivables), rather than to the underlying financial condition of the seller/client. This focus makes factoring a suitable vehicle for many growing businesses when traditional commercial borrowing proves either impractical or unavailable.
8. How does a commercial business become a reasonable factoring prospect?
A commercial business becomes a reasonable factoring prospect as long as it can demonstrate the following:
a) That it has an unencumbered portfolio of collectable accounts receivables which are payable by credit-worthy account debtors without dispute or offset;
b) That it has the margins necessary to absorb the factoring discounts;
c) That factoring will, in fact, improve the company's cash position and enable it to accommodate increased sales.
9. Can accounts receivable factoring still be an option if a company is considering bankruptcy?
In most cases factoring is still possible. However, if there is a lien on your company's accounts receivable or inventory, you should let us know on the application. Please contact us to discuss your specific situation.
10. What information is needed from a company to begin the factoring process?
We require a company's most recent accounts receivable aging reports, a master customer list and a sample invoice, enclosed with the application Prior to establishing a new client relationship, we will conduct an independent search of public records to identify existing interests or claims by third parties with respect to our client's assets, including accounts receivable and inventory.
11. Does Continuous Cash Flow verify invoices with client's customers?
For the process to run smoothly, we verify the validity of invoices prior to issuing advances. We suggest that our clients give their customers advance notice of our pending contact. We send a letter to the account debtor/customer to verify the invoices, and make a follow up Quality Assurance Call. This process usually forestalls any confusion between all parties involved.
12. How long does it take to receive the first factoring advance?
The initial factoring process takes between 5-10 business days after we receive the factoring proposal letter. After this initial phase it takes 24-48 hours after verification for you to receive the advance.
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