Factoring
Invoice Factoring is a type of financial lending wherein a business sells its A/R (invoices) to a third party (factor) who then advances up to 95% of the gross invoice amounts back to the business. Factoring allows businesses to meet their immediate cash needs, mitigate customer credit risk, and decrease Days Sales Outstanding (DSO).
Other Terms Beginning With “F”
Factored Account
Any debtor account (customer) whose invoices are sold and advanced on by the lender (Factor).
Factoring Discount Fee
The Discount Fee is the cost of using Invoice Factoring, A/R Management, and Credit Protection from Porter Capital. The factoring rate is typically based on your monthly volume and your customers’ credit worthiness.
A term used to indicate a condition where a company breaks, or cannot fully meet, its promises to creditors. This is typically due to a lack of cash flow available to meet obligations. If financial distress is not relieved, it can lead to bankruptcy.
Invoice Factoring is an easy way to resolve financial stresses by allowing immediate access to capital held up in A/R.
These documents report a company’s sales, expenses, profits, assets, liabilities, and net worth. They are typically made up of:
1. Income Statement
2. Balance Sheet
3. Profit & Loss (P&L) Statement
4. Owners’ Personal Financial Statements
This is invoice and freight bill factoring specifically for transportation or trucking companies. Freight Factoring allows for immediate access to funds needed to keep drivers and trucks on the road while also providing the ability for trucking companies to grow.
Porter Capital has its own in-house freight factoring division called Porter Freight Funding which offers both Recourse and Non-Recourse Freight Factoring.