FREQUENTLY ASKED QUESTIONS
Before going into the FAQs, it is important to understand the prime distinction between invoice factoring and net terms. Factoring invoices means that the business has already defined a transaction and the terms of sale with its customer and it is now seeking to obtain a cash advance against the presumed value of that invoice from a third party, who then assumes the risk of potential non-payment.
Offering net terms is different in that the business sets a credit limit and the terms of repayment on purchases made using that credit limit, and the customer is then able to make as many transactions as often as they like as long as they continue to pay the invoices within those terms, up to the maximum available limit.
Every situation is unique, so the solution for your business is not going to look like anyone else's, and it is important to find the right partner who can work alongside you to accomplish your goals, minimize your credit risk exposure, and maximize your cash flow opportunities. We look forward to discussing these possibilities with you, and we hope the FAQs here can give you more insight into what we can do for you.

Invoice factoring is a process where a company sells its outstanding invoices (unpaid bills) to a third-party company, called a "factor," in exchange for an immediate cash advance, typically a percentage of the invoice value, allowing the business to access cash quickly while the factor takes on the responsibility of collecting payment from the customer and then paying the remaining amount to the original company, minus a factoring fee; essentially, it's a way to improve cash flow by getting paid sooner on outstanding invoices.

There are many reasons why businesses would choose to factor invoices, but these are the two most common scenarios:

Offloading risk - Some vendors are ordinarily able to absorb the risk of potential non-payment for their invoices, but sometimes a customer may want to place a large order on invoice which, if not paid, would devastate the vendor. In such cases, the vendor may choose to sell that invoice to a third party simply to not carry the risk any longer.
Materials purchasing - In some scenarios, a vendor makes a large sale to a customer but does not have the raw materials or everything necessary in stock to fulfill that order and may not have enough cash on hand to purchase it. Obtaining a bank or other traditional loan may take too long or be too uncertain (if the business or its principals are credit-challenged) to allow the vendor to complete the sale. In these circumstances, selling the invoice to a third party, which can happen in as little as one business day, offers an avenue to obtain the funds needed to fulfill the order.

We offer two ways to provide factoring to our factoring clients. The first is the traditional method, where the client makes a sale to a customer, issues an invoice and then contacts us to have us evaluate and purchase the invoice.
We also offer access to our factoring platform, which allows clients to integrate our factoring into their order management system or ecommerce website so that they can submit requests to us in realtime for pre- approval before the sale is actually made. The advantage to this is the client has the freedom to either continue with the sale if we issue a pre-approval or they may opt to suspend it if we decline and they are unwilling to carry the invoice on their own books.

Assuming we purchase the invoice, we immediately pay a substantial portion of the invoice amount to the client and hold the remainder until the invoice is paid. Once the invoice has been paid, the balance remaining minus our fee is then forwarded to the client.

The short answer is, that depends.
We offer two type of factoring - recourse and non-recourse. Recource factoring means if the customer doesn't pay the invoice then the client is required to reimburse the amount advanced to them when it was purchased, and collection efforts become their responsibility.
Non-recourse factoring means we assume all risk and liability, and if the invoice is not paid then we absorb the loss. The client is not paid the remaining balance but does not have to return what they already received.

The fees for recourse factoring are lower than non-recourse for obvious reasons - since the client remains responsible for the invoice in recourse factoring, the only risk we run is that the client is unable to reimburse us for what they were paid when the invoice was purchased. However, most clients choose to pay slightly higher fees for non-recourse factoring, since it helps insulate their business against potential loss from invoice non-payment.

Typically payment for 75% of the invoice amount is transferred to you the next business day. The balance is held until the customer pays the invoice. We then transfer the remainer, minus our fees, to you within 2-3 business days.

The fees we charge (we call it the "discount rate") vary from client to client for several reasons but can range between 1% and 6% of the invoice amount.
The factors that decide the fees we charge each client include the industry the client is in (some industries carry higher risks than others), the volume of invoices we buy from the client (higher-volume clients may receive discounts), the payment history of invoices for the client, and the average amount of invoices purchased (smaller average invoice amounts have higher servicing costs).
Keep in mind too that we are always evaluating client accounts, and even if your discount rate starts out at the higher end, it can always be adjusted downward as we develop better informaiton on how your invoices are performing.

"Net terms provisioning" is simply the term we use to describe the toolkit we provide our clients to enable them to offer net terms accounts to their own customers.
We have designed an easy-to-use web-based API for our ecommerce clients which enables them to offer net terms financing to their customers. The tools can be incorporated into the clients' ecommerce systems so that they can obtain real-time authorizations from us for individual purchases, or they can upload them in batches at the end of day if their accounts are authorized for this.
In addition, for clients who don't wish to use our automated API, we provide a secure web page to manually enter the information for authorization requests.

We offer an easy application and onboarding process, with flexible terms based on a review your business model and typical customer profile. You can also choose what terms you wish to offer, including NET30, NET45, and NET60. We will establish initial terms and provide you access to our both web-based API and our webform-based approval and tracking tools.
Once approved, you have multiple options for how you provide terms to your customers (see the first question above), and we promise a simple and seamless process.
Depending on which program you're approved for, you could be offered 75% funding for your receivables within one business day, or you may be funded as you ship orders and provide us with tracking numbers for verification. Then, once the client pays the invoice, we will release the remaining funds minus our fees.

In many ways the programs are the same, but with two big differences. When factoring invoices, the terms that were offered to your customer may be different than what we would normally offer. For instance, you may offer NET30 terms with a 10% discount if paid within 10 days. In such cases the fees we assess will be based on the unique circumstances of the invoice amount and terms.
The other (and perhaps most important) difference is that we offer optional business credit reporting to the major bureaus for clients who are interested in having us do so. We can do this because once we purchase the invoice or facilitate a net terms transaciton, your customer essentially becomes our customer too. This is a commonly-used option by our clients, because their customers would like the business credit bureaus to know about how they are managing debt.
Finally, the fees assessed under each program are different, and that distinction can make the difference for some clients who are seeking the lowest possible costs, which is absolutely understandable.