You know those days when you really love what you do for your career. This article is about just one of those days. I did a deal for a client that Discount Factoring was the absolutely perfect option for his business and everything went off without a hitch.
I have a client that is in the Telecommunications service business that has been doing a very modest business over the last few years. Because of some industry changes and the specialization of his business he was perfectly positioned to triple his business from last year because of the upgrades in this industry and he has become a preferred service supplier for them.
Now you may stand back and say, wow what a great success. Here is the problem. The terms of sale of his service are net 60 days. What this means is that if he completes a job today and raises the invoice, he will not get a commission check on this until 2 moths from now. This creates a real problem when the people working at the company will expect to get paid bi-weekly, the suppliers expect net 30 and the employees are to be paid bi-weekly.
As I mentioned, this type of issue is not an uncommon one. If a company has a major sales increase, and they sell on terms, it is very easy to get into an overexposure situation when you do not have adequate financing. When he visited the bank, the answer was a quick, no " I am sorry I can not help you.
It is a tough thing to accept when you go to the bank after you had been dealing with them for years and you have good credit and the bank declines your application.
The Solution: Small Business Factoring. I set the company up with a Line of Credit using the Accounts Receivable as security and the advance rate is 85% of what ever he has in open AR.
The deal came to me on Tuesday and Legal docs were issued on Friday then the funding took place on Monday not even 1 week from application to funding.
About the Author:
Wade Henderson - very Professional - 15 yrs in the Business Finance Field - reputation for getting the deal done. IMMFinancial.com small business financing receivable factoring
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