US Government Now in Accounts Receivable Factoring Business

By Wade Henderson

It makes you wonder what the President will not do to stimulate the economy.

As seen in today's NY Times (03/19/2009):

DETROIT " The Obama administration moved on Thursday to stabilize the American auto industry by creating a $5 billion fund to support troubled parts suppliers.

The program will provide supply companies with much-needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need, the Treasury announcement said.

So what does this mean for the industry? Until the details are rolled out is hard to say specifically, but the announcement to get into the Accounts Receivable Factoring business is the latest installment of how far the US Government will go to get the economy back on track.

I had predicted that Accounts Receivable Factoring is going to be a major financing method of our economy revival and this proves how accurate that is.

Not everyone is familiar with Accounts Receivable Factoring so I will give you a quick overview. In it basic form, Accounts Receivable is a Line of Credit for Businesses which advances companies funds based on their Invoices that are outstanding.

Most Factoring facilities will advance from 80% up to 90% of the outstanding invoice face value. The cash injection can be used for what ever the company needs the money for " payroll, supplies, inventory whatever. Once the end customer pays the invoice then the reserve will be paid to the company that factored the invoice less the finance fee.

The Factoring fee will vary depending on the advance rate and the days the funds are outstanding but the average is around 2% to 4% per month.

What is often used with Accounts Receivable Factoring is Purchase Order Finance. If you do get Purchase Order Finance you will need an Accounts Receivable Factoring line to go along with it in 99% of the cases I have seen.

This option works best for distributors but Accounts Receivable Factoring can work for companies in nearly any sector. If your company needs financing like this, the best option is to speak to a Professional Commercial Finance Broker because they will be up on all the trends and latest programs available through the various lender channels.

Best of all, in most cases the services of a Professional Commercial Finance Broker will not cost you a fee because the Broker will be compensated by the lender for them preparing the deal for them so it really is in your best interest. - 29886

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Factoring Saves Texas Based Trucking Company

By Wade Henderson

What do you think of a bank that would pull the plug on the financing of a successful trucking company that employs more that 100 drivers? Now what I am referring to is a profitable company that is struggling to make ends meet, but is doing just that.

This is exactly what happened to a Texas based freight carrier recently. The explanation the bank gave the owners was that the bank had reviewed its guidelines recently and the trucking company no longer fit the guidelines so in compliance with the covenants in the Commercial Line of Credit they secured 3 years prior with the bank, they were now within their rights to call the loan. The owners of the company contacted an Internet Based Commercial Finance Brokerage who put together an Accounts Receivable Factoring facility for them which not only was able to pay off the bank as required but also was able to increase the amount of financing available to the company for their operations.

This has happened many times to many different companies in the United States and Canada over the last couple of years. As much as President Obama is working to make funding available to companies for their operations, banks still are contracting their risk threshold and are less willing to expose themselves to risk every day.

Many businesses are in dire straights in regards to their cash flow and the last thing they need is more debt. Accounts Receivable Factoring is designed just for this situation. It is not debt, the advances you get is your money so you are not increasing your companies debt load by using it.

It really does not matter if you are in Canada or United States; it is the same story all over. Commercial Lenders do vary in regards to the products they carry and the strengths they posses in the various industries. Just because a lender is good in Commercial Equipment Loans does not mean they can handle you Line of Credit in your trucking company. Commercial Finance Brokers have the experience to know who does what the best.

Commercial Finance Brokers are up to date with the latest changes and options available. Many Commercial Finance Brokers can handle Financing options ranging from Accounts Receivable Factoring, Purchase Order Finance, Export Finance, Commercial Equipment Loans or Commercial Mortgage. - 29886

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