What Are the Costs & Benefits of Factoring?

Some consider factoring too costly, but that view is often distorted because much of the cost of factoring is recoverable. Consider the following savings resulting from a steady flow of cash into the business:

• Cash discounts on your purchases.
• Savings on the cost of credit investigations.
• Savings on the cost of other overhead services relating to the management and collection of accounts receivable.
• Elimination of cash discounts granted to customers.

There are also some intangible yet significant featured and benefits to factoring that are often overlooked. Among these are the following:

• Availability of funding based on sales — not on the strength of financial statements;
• No encroachment into your equity;
• No hard security required;
• Quick Response:
  • Low documentation
  • No expensive audits
  • No endless committee meetings

Entry costs, in most instances, are limited to a due diligence fee. There are:

• No commitment fees
• No closing fees
• No unused line fees
• No legal fees (usually)
• No fixed/long term contracts

Factoring provides immediate funds for your credit sales. This acceleration of your cash flow enhances your ability to grow your business.

Factoring also provides you with a complete Accounts Receivable management system staffed by professional managers who work in cooperation with you and on your behalf. These management services can be as valuable to your company as the capital itself. Factoring is proactive, quick and flexible.

The real decision driver is not what factoring costs, but what it can do for your bottom line. Factoring can increase sales and reduce overhead by providing predictable and accelerated cash flow.