Small Business Factoring...A Bit Closer to Their Clients
Everyone knows that starting a small business is a financial challenge. Many times, a small business will have to wait months or years before realizing a profit.
Growth requires cash flow management and most small businesses lack the business financing required to help manage their cash flow.
A bank will not normally give loans to a business that it does not deem creditworthy based on an stringent set of requirements.
Although accounts receivable factoring can provide a small but promising business with instant cash flow, large national factoring companies can also be a bit restrictive and inflexible.
Factoring companies like Charter Capital remain focused on the small to mid-sized business (SMB) market in contrast to what banks and some of the big national factoring companies do.
Our industry segment can be described a Small Business Finance or Community-Based Financing.
Besides being more flexible than the rest of the commercial factoring industry, small business factoring companies have many attractive features. Here are just a few:
- Customers are small or start-up companies
- Small business factoring companies tend to be small companies too
- Small business factoring companies do business in their own communities
- Small business factoring companies are more in tune to the local economy
- Small business factoring companies tend to provide more service to their customers
- Small business factoring companies often take on deals that national factoring companies and banks are not equipped to handle well.
The consolidation of the business finance industry has left many more small to medium sized companies (SMBs) with fewer financing options.
As more mid sized factoring companies and banks merge with bigger business finance institutions, the small to mid-sized business segment becomes more underserved.
This is largely due to their size alone as large business financing companies, and banks tend to loose their flexibility as they grow larger.
Whereas small business factoring companies usually have a great degree of flexibility, both financially and operationally, usually giving personal attention to their client's needs.
Small Business Factoring Companies like Charter Capital that remain flexible and are able to take a "hands on" approach with regard to their clients, will continue to fund successful start-ups and small businesses.
"Flexibility" and "service" tend to be core principles
with Small Business Factors, and are sometime lost with
banks and large factoring companies.
What is Small Business Factoring?
Business
Definition for: Factoring
The practice of transferring title
of accounts receivable to a third-party (the factor) at a
discount, in return for prompt cash. There are many ways to maintain a positive cash flow when growing your business and dealing with accounts receivable issues.
One popular way to improve cash flow management is a form if business financing called factoring.
Accounts Receivable Factoring (also known as Business Factoring) is the practice of selling your accounts receivable (invoices) at a discount to a factoring company.
You get the money from the factoring company that you sold your accounts receivable to and they become responsible for collecting on the invoices.
The reason many companies decide on this type of business financing is to ensure the continuous cash flow to the business.
Essentially, businesses who use factoring as their business financing choice are focusing on having most of the money now rather than all of it later.
It can take time to collect on an invoice, so when a company factors its accounts receivable, they are getting their money faster and without the hassle of the collection process.
With small businesses, it is even more important to free up working capital through factoring. The money can be invested into new equipment, used to pay bills, or used toward payroll.
Of course, the alternative is to chase the customer for the invoice payment and defer everything else while the money is tied up in the collection process.
In order to fully understand business factoring, you should be familiar with the service: You may consider the following ideas so that you may have a better understanding of factoring.
It could be best option for your business.
Is Business Factoring a type of loan?
No. Even though business factoring is commonly referred to as “ factoring loans ”, it is a financial transaction between the business seeking funds and the factoring company, but no bank. Accounts Receivable Financing (Invoice Factoring) is when a company, like Charter Capital, purchases your accounts receivable invoices at a discount and provides you with immediate cash.
Compare Factoring vs. Bank Loan
Small Business Factoring is a no-loan alternative to business financing
As an alternative source of business financing, accounts receivable factoring eliminates many of the difficult-to-meet criteria of a traditional bank loan.
If you can get a loan or line of credit in today's tight banking market, what are you going to do after you've spent those funds? You are still going to be waiting for the invoices to be paid. The biggest problem with a traditional bank loan is that there is a maximum credit limit.
Whereas Charter Capital provides no-loan cash based on the quality and liquidity of your assets (your accounts receivable).
Because each account is evaluated individually, Charter Capital has much more flexibility than a Bank when it comes to keeping up with an increase in sales.
How Much Does Accounts Receivable Factoring Cost?
As we all know, Small Business Factoring is not free, but when used properly, it can more than pay for itself. The idea is to have cash in hand rather than chasing the full amount of the invoice.
Typical fees are a few percent of the invoice amount depending on several factors such as the volume of factored invoices & how long your customers take to pay.
Some of our fees are as low as 1.5%.
Regardless, when you use business factoring to grow your business, your bottom line should increase because the additional profitable business you are now able to add and should more than offset the factoring costs.
How Do You Know Charter Capital is the Right Small Business Factoring Company for You?
If you are a small to mid-sized business owner who has made the decision to acquire business financing by factoring your invoices, you need a factoring company like Charter Capital.
No-loan business financing from Charter Capital provides
your company with the cash flow and experienced
professionals you need to grow your business.
Small Business Factoring Is Your Simple Cash Flow Management Solution.
At Charter Capital, the process is very simple. Your first step is to contact us.
Give us a call or fill out our online application.
This process should take you just a couple minutes and we will be able to contact you with pricing in less than 24 hours.
Once we have set you up with a Charter Capital FactorLine, obtaining cash for your accounts receivable in less than 24 hours is simple and easy.
- You provide your service or product to your customers as you always have.
- You continue to bill your customers as you always have.
- You submit your invoices that you want to factor to Charter Capital along with our simple factor form.
- We wire your funds directly into your bank account. Typically, in less than 24 hours.
- We wait for your customer to pay us directly. When we receive payment, we notify you on the same day.
- You continue to grow your business, free from the worry of your cash-flow.
Benefits of Business Factoring from Charter Capital
Accounts Receivable Factoring from Charter Capital is your key to growing your business.
With factoring as a source of no-loan business financing, you are free from many of the restrictions placed upon your business by a traditional bank loan.
Most importantly you are free to grow without having to give up equity or control of your business.
A Charter Capital FactorLine will allow you to grow your
business. No longer will you be afraid to turn down a
customer because you cannot grant them payment terms. No
longer will you have to turn down business because your
customer isn't going to pay you for 30, 60, or 90 days, but
you have to pay your employees on Friday. No longer will you
have to wait for your customer to pay before ordering more
material that you need for the next job. Most importantly,
with a Charter Capital FactorLine, you can spend your time
growing your business instead of worrying about
cash flow.
A Charter Capital FactorLine will allow you to increase
your bottom line profits.
A Charter Capital FactorLine is a powerful tool to
improve your financial position. When you use your
Charter Capital FactorLine to grow your business, your
bottom line should increase because the additional
profitable business you are now able to add should more than
offset the factoring costs. In many business your net
margins increase too. Since you have already paid for fixed
costs, like rent, office staff, etc, the additional sales
that you are able to make are your most profitable ones.
A Charter Capital FactorLine will help you manage your
customer accounts. Charter Capital can provide you with
valuable information that can help you determine if a new
customer is a higher credit risk or not. Charter Capital can
also assist you in managing your customer accounts. That
being said, we know that every business is different.
Upon applying for a
FactorLine, we will listen to your needs as it involves
the collection process and we can customize a program just
for your company depending on your particular needs for our
involvement. Many of our clients prefer to continue
participating in the collection process in the interest of
preserving continuity with their customer relationships. As
a financial incentive, the Client is rebated a part of the
discount fee based upon a schedule of declining days
outstanding. Other clients prefer that we become more
involved and handle the collections process for them. Either
way, your customer will be treated with the same respect and
courtesy that you would personally give them.
Call or contact Charter Capital
today.
Call us toll free at (877) 960-1818
or email us today to find out how easy it is to
set up a Charter
Capital FactorLine. One of our account representatives
will be happy to visit with you about setting up your
FactorLine.
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