Traditional factoring gives businesses the opportunity to borrow against their outstanding invoices. Factoring also allows companies to outsource credit and collection functions, and provides a built-in revolving line of credit. Factoring is a complete financial solution that combines credit management, working capital financing, credit protection, accounts receivable bookkeeping, and collection services.
Traditional factoring revolving lines of credit typically range from $2 million to $20 million.
Most companies qualifying for a First Capital traditional will be B2Bs (business-to-business) in manufacturing, wholesale, distribution or business services generating commercial accounts receivable invoices. In most cases, annual sales range between $10 million and $250 million.
Additional Factoring Programs
1. Receivables Management Program
First Capital can provide Receivable Management services and Credit Protection. Collateral is protected against bad debt risks and accounts receivable turnover improves allowing banks to lend with confidence. Click here to learn more
2. Receivables Asset Monetization Program
Monetization of Accounts Receivable to "RAMP"up liquidity using off-balance sheet structures. Assets are converted to cash without adding debt to the balance sheet allowing for strategic balance sheet management and improvement in liquidity. Click here to learn more
What is Traditional Factoring?
Factoring is a complete financial solution that combines credit management, working capital financing, credit protection, accounts receivable bookkeeping, and collection services.
How does Factoring work?
Accounts Receivables factoring is an agreement between your business and First Capital.
- First Capital establishes credit lines for your customers and clients based on our credit management expertise and years of experience.
- You ship goods or provide services to your customers and clients as usual and assign the commercial accounts receivable invoices to First Capital.
- First Capital performs collection services on accounts receivables in a customer-friendly fashion once the invoices become due.
- Payments are remitted to your company less a small fee.
- If the customer or client becomes unable to pay because of financial inability, First Capital pays your company for the outstanding invoices.
Accounts receivable factoring provides a business line of credit that allows you to borrow against your factored invoices for working capital needs such as inventory and equipment financing.
Online reporting allows you access to your account to monitor accounts receivable agings as well as individual invoices.
Basically, Accounts Receivable Financing is a form of outsourcing with a built-in revolving line of credit feature. By using First Capital to factor commercial invoices, the accounts receivable servicing function can be converted from a fixed cost to a variable cost while obtaining a higher level of expertise, more years of experience, and better consistency than a company can usually do on its own.
Although you do not have to borrow against your outstanding accounts receivable invoices, it's like having an active business line of credit whenever you need it.
What Types of Companies Use Factoring?
Small to medium-sized (and in some cases large) businesses that make or distribute products and/or provide services to other businesses in virtually every industry can employ receivables factoring services. The main requirement is simply commercial accounts receivable, payable from other businesses. Whether you're in high-growth mode, turnaround, or anywhere in between, First Capital's Receivables Factoring program may be right for your company.