How is Factoring Different than Bank or SBA Loan?

When a small business needs a loan, there are some different options available to them. Many of these options will depend on the age of the company, their credit history, what types of assets they possess, and what industry they are in. Newer companies in high growth, high-profit industries, can go after venture capital. Established companies, with good credit, can … Read More

What is Recourse Verses Non-Recourse Factoring?

There are two main types of factoring – recourse and non-recourse. Recourse factoring is the most common and means that your company must buy back any invoices that the factoring company is unable to collect payment on. You are ultimately responsible for any non-payment.  Non-recourse factoring means the factoring company assumes most of the risk of non-payment by your customers. Non-recourse does not … Read More

Can I Factor My Past Due Invoices?

Most factors will purchase invoices that are slightly past due.  If you have net 30 payment terms a factor may be willing to purchase an invoice that is 40-45 days old. The factoring company would need to verify that the invoice has not been paid yet.  If your invoice is significantly past due, for example, 80-90 days it is then … Read More

Will You be Bugging My Customer?

American Funding will never bother your customer. We try to stay behind the scenes and allow you to maintain the relationship with your customer. We do what we call “soft collections” for our clients. We will reach out via email at 45 days if the invoice hasn’t been paid. We ask if Accounts Payable has the invoice in their system … Read More

Will My Customer Need to Complete a Credit Application?

Your customer will not need to complete a credit application.  Instead, American Funding will pull a No soft credit inquiry on your potential new customer using a commercial credit reporting agency.  We just need the business name and address to pull a commercial credit report.  This type of inquiry does not affect your customer’s credit score or show as an … Read More

Is Factoring Expensive?

Factoring Your Receivables is an excellent way to increase your cash flow, but how much does it really cost? Typically, if you have net 30 terms with your client you will pay between 2-5 percent.  Most factoring companies charge 1% of the total invoice every 7-10 days. For example, if your invoice is $1,000 and goes out 38 days on … Read More

Will I Build my Business Credit by Factoring?

While factoring will increase your cash flow it does not help to build you business credit directly. Factoring companies report to the top credit reporting bureaus monthly, but they only report on your customers unpaid invoices. They do not report on their clients, instead they report on their client’s customers. Get Business Capital without lowering your Credit Score If you … Read More

What is PO Funding? How is it Different than Invoice Factoring?

Purchase order financing (PO funding) helps businesses fulfill product orders.  If sales outpace your incoming cash flow, then purchase order financing might be a good fit to fulfill your customer order. Funding is sent directly to your vendor to purchase the product.  Once the product is shipped to your customer, an invoice is created and then factored to pay-off the … Read More

What is a Notice of Assignment?

A Notice of Assignment is a letter that a factor will send to a customer that you choose to factor. The notice lets your customer know that the receivable has been assigned and that all future payments will need to go to the factor until the assignment is released. The Notice of Assignment contains other clarifying information for your customer. … Read More

What if My Customer is Also a Small Business?

A large part of your ability to fund invoices with a factor will hinge on the creditworthiness or your customers. Just because your customer is also a small business does not mean that they will not credit qualify. Many small businesses have been around for years and have great payment history. Providing their information to your account manager for a … Read More