Factoring Loan

Factoring (Factoring Loans) assest the costs by looking at the benefits. Much to often our potential customers will begin the factoring loan decision by looking at discounts on an annualized basis, as you would a typical bank loan.

They take the percentage they are quoted, annualize it (multiply it by 12) and reply with "you're going to charge me that much interest!" The fact is we deal in short term fundings, our average invoice pays in 46 days. When they respond that is still a lot of interest, we ask them to look at the 2% they offer for payment made in net 10 days. In a year there are thirty six 10 day periods. When you use the annualized percentage parallel that equates to 72% interest! Are they paying 72% for quick payment? No, and CapitalPlus doesn't earn large interest rates for funding either. Why? Because factoring loans are short term advances. To compare it to a long term loan is like comparing apples and oranges. In the end, the decision to factor always comes down to a business decision. If this money is going to cost X%, can you take the money generated by the factoring loan and earn more than X%? Most of our customers weigh the costs of their factoring loan against the costs of not factoring.

Most often the decision is between the factoring loan, and putting up with cash flow problems. If you are missing sales opportunities because of a lack of cash flow, be sure to consider that lost revenue when weighing the cost of a factoring loan. To accurately figure your profit margin with factoring (factoring loan), you must take into consideration the full spectrum of services offered. This is especially true if you are comparing factoring to borrowing then you are probably on sound ground. If you are looking to use the proceeds of invoice factoring to pay overhead, to clean up bad debts, to pay past due cost-of-goods invoices, then you need to look carefully at what you are doing. Will this increase your chances of growing and expanding? It is rare that companies decide not to factor because they could not afford to. As a matter of fact, in most cases, companies decide to factor because they can't afford not to. Let CapitalPlus tell you how we can structure a custom solution for your company. CapitalPlus: WE STRUCTURE SUCCESS