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10 Most Commonly Asked Questions to Know if Receivables Financing is Right For Your Business

By December 29, 2021CFS Blog

Receivables Financing, also known as factoring, is an easy solution to fund new contracts if a traditional bank loan is not an option or simply not sufficient. It is an advance on your open receivables for a fee as opposed to waiting 30, 60 or even 90 days to get paid. Many companies that have private sector or government contracts utilize factoring to grow their business.

Q: How long does it take to get funded?

A:The entire process can take as little as two days to two weeks depending on how quickly we receive the needed documents and the number of accounts to be factored.

Q: Can we qualify for accounts receivable financing with a history of credit problems?

A: Yes. CFS is more concerned with the credit quality of your customers.

Q: Our business just started. Can we qualify despite the fact that we have no credit history?

A: Yes. CFS works with new companies and factors invoices to provide the cash flow they need to succeed. We will look at your customers ability to pay, not yours.

Q: Can we qualify if we already have loans or a line of credit?

A: Yes. Having an existing loan is not a determining factor for qualification. However, as part of your loan, you may have pledged your Accounts Receivables as collateral. If this is the case, CFS will work with you and your current lender to structure a Subordination Agreement. This is a common occurrence, and in almost all cases, the current lender will agree to work with us.

Q: What does accounts-receivable financing cost?

A: Our fees depend on the industry, the credit quality of your clients and the advance rates. A complete, simple to understand fee schedule will be provided before we begin funding. As we are a Receivables Management firm, we ensure that you understand exactly what the cost will be prior to factoring. In addition, we will work with you to help you minimize your fees.

Q: How large does our invoice need to be to qualify

A: We will accept single invoices as small as $500.00

Q: Do we have to factor all of our receivables?

A: No. You decide which invoices you want to Factor and when you want to Factor them. You maintain control of your program.

Q: Do you notify our customers to pay you, the Factor?

A: Yes. We send a simple “notification of assignment” letter to each account advising that we have entered into a factoring agreement and that future payments should be made to CFS. In addition, all invoices are now made payable to Capital Funding Solutions. Factoring is now very common and most companies are accustomed to working with Factors.

Q: How do you verify my accounts receivable? Won’t my customers wonder what is going on?

A: We are very sensitive to the image you have developed with your customers. Prior to implementing a routine to verify invoices, we work with you to develop the best system for your accounts. We also ask your accounts how or what we can do to make verification simple for them. It is essential that we verify most if not all of the invoices we acquire, but we go out of our way to make it quick and simple for everyone involved

Q: Is there an upper limit on the factoring invoices you accept?A: No. We can service virtually any size transaction.

Our Most Utilized Options For Business Growth:
Invoice Factoring:If you are waiting 30, 60 or 90 days for receivables and need that cash flow now.More Details or Apply

Supply Chain Financing:You need fast access to capital to increase liquidity in your supply chain.More Details or Apply

Purchase Order Financing:You have Government (B2G) or B2B contracts and need cash or credit to deliver a final product.More Details or Apply