Factoring
What is factoring? It is selling your invoices to a
factoring company. You get cash quickly, and don't have to
collect the debt. The factoring company gets the debt and
has to collect it.
You can use factoring to:
Example: Smoothing your cash flow
You issue invoices of approximately $30,000 each month, and
have a variety of clients who can take between 1 to 3 months
to pay. Therefore, although you issue invoices regularly,
the money comes in at unpredictable times, making it
difficult for you to manage your cash flow.
You contract out the collection of all your invoices to a
factoring company who provide a "professional and courteous"
service, so you know they won't upset your clients. They pay
you immediately for the invoices, as they are raised, say
$29,000 each month. They not only collect the debt, but also
manage your sales ledger for you, which cuts down on your
administration costs. Contact DCS to assist in managing
your cash flow to improve operations.
Accounts
Receivable Financing
We realize that
financing the growth of your business can be a challenge.
Newly developed or established businesses selling on credit
terms will eventually need more working capital due to
growth. If your credit sales to commercial accounts have
created a cash flow shortage in your business, then your
company will benefit the most by utilizing our accounts
receivable financing service. Business owners realize that
there is no need to borrow money from a bank in order to
offer credit terms to customers.
What is
Accounts Receivable Financing?
Receivable
financing is a method used by businesses to convert sales on
credit terms for immediate cash flow. Financing accounts
receivable has become the preferred financial tool in
obtaining flexible working capital for businesses of all
sizes. The receivable credit line is determined by the
financial strength of the customer (Buyer), not the client
(The seller of the receivables).
Accounts
Receivable Financing is available in days, not weeks.
DCS, we make
receivable financing easy to obtain with minimal paperwork.
Our decisions are not based on financials, tax returns or
even equity to debt ratios. We make decisions primarily on
the invoicing process and the credit strength of the account
debtor (buyer). We specialize in evaluating and financing
accounts receivable and can make a prompt decision within a
day. This financial solution involves very little
underwriting. The approval process is simple and we can
expedite initial funding in 3 to 5 working days. Our clients
can enjoy the benefits of our prompt service and begin to
use their funds within days of completing an application.
What Industries
Qualify for Receivable Finance?
Every industry is
evaluated differently because no industry invoices the same
method. Not all factoring companies accept every industry.
As a rule of thumb, your business must sell to a good credit
worthy account debtor (customer), a receivable or invoice
that can be verified or has an acceptance (signed off) by
the account debtor. Receivable financing is available to all
industries that provide services, or deliver products to
commercial accounts. The sale must be "final sale" with no
contingencies or disputes. The service or product must be
completely delivered in order for an invoice (receivable) to
be eligible for funding.
Accounts
Receivable Financing Frequent Questions
Invoice
Factoring Facts
Accounts
receivable funding is a widely used financial solution for
all types of businesses that extend credit terms to their
customers. Here are some common questions our customers ask.
How is accounts
receivable funding different than a loan from a bank?
When making an
accounts receivable funding decision, we will focus on the
creditworthiness of your customers while banks will focus on
your company’s financial history and cash flow. Accounts
receivable funding is not a loan, therefore provides you
with less debt on your company’s balance sheet. we can make
a quick funding decision, while banks may take weeks—even
months—to approve a loan.
Will my company be eligible for accounts receivable
funding if it has a bank loan or line of credit?
If a bank has a
lien on your company’s accounts receivable, you should let
us know right away. We will ask the bank to subordinate that
lien. Some banks will accommodate the request and others may
decline depending on your circumstances. Our number one
referrals come from loan officers willing to help out the
client in cash flow needs. They are very familiar with this
kind of interim financing. The other alternative is to pay
off the loan if there is plenty of receivables to leverage
the buy out.
My company owes
back taxes. Can I still apply for accounts receivable
funding?
Tax problems are
handled on a case-by-case basis. Please let us know
immediately so that we can discuss a lien subordination with
the tax entity or request a payoff amount. We can use the
initial funding to payoff the tax entity if there is enough
leverage.
If my company is considering bankruptcy, is accounts
receivable funding still an option?
Please note that
Chapter 11 is the only form of bankruptcy that we will
consider.
What information will you need from my company to begin
the accounts receivable funding process?
A short
application, your company’s most recent accounts receivable
and accounts payable aging reports, Articles of
Incorporation or d/b/a/ filing, a master customer list and a
sample invoice.
Which customers would be good candidates for accounts
receivable funding?
Usually 80% of
your business comes from 20% of your customers and these
would be the most likely to factor, however, we will factor
100% of your customer base so long as they are credit
worthy. In order to approve your customer base, we will need
their names, addresses, phone numbers and the amounts of
credit desired for each client. This will save you time when
submitting invoices to us.
Can you purchase only a portion of my company’s invoices
or one customer?
Yes, so long as it
is not a one time deal.
How long does it take to receive the first funding?
The initial
funding takes between 3-10 business days after we receive
your signed agreement. If you wish, you can send some
invoices to be funded with the signed contract in order to
expedite your funding. After the initial funding, your
company can receive funds within 24 hours after invoice
verification.
How much of my
company’s accounts receivable can be funded?
We can fund up to
100 percent of your company’s creditworthy accounts
receivable and depending on the industry, we may fund up to
92% advance.
What should I
do if my customer mistakenly sends the payment to my
company?
The answer to this
question will apply to any factor you deal with. This is
very common especially with the first initial funding. If
this occurs, the check must be sent to us immediately. Your
company should never deposit invoice checks that were
already purchased by a factor. Your customer will be
notified to pay us directly in the future.
How can I be certain that your company will treat my
customers well?
The last thing we
want is for you to lose a customer. We are not a collection
agency. We will never harass your customers for money.
Maintaining your customers’ goodwill and confidence are of
utmost importance to us!
What should I
tell my customer when they find out I am financing my
receivables?
Should an account
debtor (customer of our client) who is unfamiliar with
factoring question the notice of assignment and ask what is
going on, the business owner only needs to tell them they
have chosen to use a company to manage and finance their
accounts receivable.
If you would like to be contacted or start the funding
process, please fill out the form below. An account
representative will call you to discuss and answer any
questions you may have about our funding programs.
Receivable credit lines starting at $5,000 to $10 million
revolving. $250,000 Receivable Finance Program Requires:
Simple Application - No Financials Needed - No Minimum
Invoice Fees - No Monthly Minimums - Short Term
Agreement (Construction will need financials and requires
100k monthly minimum)
Purchase Order
Financing
DCS offers a broad
selection of purchase order financing for your
manufacturing, domestic or international trade financing
needs. Purchase Order Funding is available for U.S. based
companies with a proven track record in their industry.
Our areas of expertise include production finance for work
in process and Letters of Credit for trade finance,
including import and export transactions as well as domestic
trade purchases. We can work in conjunction with factoring
or accounts receivable financing sources to provide a
complete business solution to turn purchase orders into
receivables.
Purchase Order Finance is short term financial solution used
to finance the purchase or manufacture of specific goods
that have been pre-sold by the client to its credit worthy
end customer. Funding involves issuing letters of credit or
providing funds that allow clients to secure the inventory
they need to fulfill pending orders.
DCS can facilitate
financing programs that help your sales growth. More
specifically, our purchase order or trade finance programs
fund sales transactions up to 100% of the capital
requirements. Most commonly, these transactions start in the
form of a written purchase or sales order from your customer
for specific goods. Our clients find themselves in one of
three situations:
-
Sales growth
is outpacing available working capital or bank credit
lines.
-
Seasonal sales
spikes or growth spurts put a sudden strain on cash
flow.
-
Working
capital must be preserved for other mission critical
operations such as R&D, manufacturing, capital equipment
or marketing.
Purchase Order
Finance:
-
Must be in
business for at least one year.
-
Must have
experience and previous transactions with client or
other similar clients.
-
Must have at
least an initial $100,000 transaction minimum.
-
Must have a
viable purchase order from a credit worthy customer or a
Letter of Credit that satisfies our criteria.
-
Must retain a
minimum of 25% profit.
-
Must be a USA
company.
Purchase Order
Financing that will be considered for funding:
-
Industrial and
Manufacturing
-
Wholesale
distributors/ importers and exporters
-
Government
Contracts
-
Service
Contracts
-
Retail and
Apparel
-
Direct
shipment/Drop ship orders
Project funding
for the following costs:
If you would like
to be contacted or start the funding process, please fill
out the form below. An account representative will call you
to discuss and answer any questions you may have about our
funding programs. Receivable credit lines starting at $5,000
to $10 million revolving. Purchase order funding will
require financials, tax returns, and receivable financing.
Please
contact DCS to discuss Factoring options for your
business.
Asset Based
Lending
Asset Based
Lending for Working Capital
DCS offers asset
based lending for companies that need to maximize their
borrowing capacity using accounts receivable and inventory
as collateral. Receivable based financing combined with
inventory finance has become a useful tool for many
undercapitalized businesses.
Unlike traditional bank debt that relies heavily on balance
sheet ratios and cash flow projections as loan criteria,
DCS
will evaluate a client's business assets as its primary
focus to establish the borrowing base. The result is usually
far greater borrowing power than can be achieved from a
traditional cash flow banking approach due to our expertise
in industry specialization.
Asset Based Lending Verses Bank Financing
The fact is banks
prefer to lend on stationary tangible hard assets, and
occasionally inventory and receivables are considered as
part of the borrowing base but at a low advance rate.
DCS
Credit can offer higher advance rates due to our experience
in receivable valuation. In the event where the client
already has a bank line of credit, an Inter-creditor
agreement is made between the bank and our Credit company
where the receivables are assigned to the creditor and
therefore allows the client to borrow at higher advance
rates.
Asset Based
Lending Businesses Benefits
The majority of
our prospective clients are undercapitalized companies that
have good performing receivables and are growing faster than
their cash flow intake. Asset based financing works well
with manufacturers, distributors and service companies with
a leveraged balance sheet whose seasonal needs and industry
cycles often disrupt their cash flow.
Please note, asset
based lending requires minimum sales volume for
consideration. ($2.5 Million)
Please
contact DCS to discuss Factoring options for your business. | 
