Invoice Factoring Blog Posts

Invoice factoring

How Factoring Can Help Get Young Businesses Off the Ground

Starting a business requires a leap of faith. Even when you know you’ve got the skills and know-how to be a success, there are many ways that your budding venture can go wrong.

Arguably, the toughest part for any entrepreneur is securing the funds to gain traction and grow despite having secured contracts with clients.

What’s worse for new businesses than to have to turn away paying opportunities because they don’t have the capital to finance their operations, hire new people or invest in new equipment? Most young businesses can’t afford to turn away paying customers. They also can’t afford for word to get around that they can’t take on bigger projects.

For start-ups and young businesses, there is a chicken-or-the-egg dilemma when it comes to qualifying for lines of credit or getting approved for a loan. Banks want to see history and a strong client base. But business owners can’t always build a decent portfolio without the capital to take on more clients.

For this reason, invoice factoring can be a way for new business owners to turn those early invoices into real working capital to get their businesses off the ground.

Young Businesses Need Capital: Factoring Provides It

You know the saying, “you need to spend money to make money”? Ask a business owner if this is true. Rarely, can a young business survive without consistent working capital.

In fact, a lack of sufficient capital is the second-most common reason that new businesses fail. New business owners often borrow money from friends and family to help support their dreams. Or, they go into considerable personal debt in order to finance those early stages.

Either way, you have somebody looking over your shoulder and expecting to be paid back. That’s a lot of pressure when you’re just starting out.

Invoice factoring provides working capital and predictable cash flow your new business needs. Unlike banks, factoring companies provide funding by purchasing your outstanding invoices. That means that if you’ve got invoices, you have access to an immediate source of funding. The best part is that you’re getting an advance on your money. So not only do you get your money, you get it without the debt.

As a start-up, you understand that it’s all about speed, and that’s the foundation of factoring. Once your application is approved, you can get funding in as quickly as 24 hours after you submit your invoices. You can use those funds for anything that you’d like, restriction-free. Use it for payroll, to pay rent or to invest in new equipment.

Young Businesses Need Support: Factoring Provides It

Business owners often find themselves wearing many hats in the course of a day. How often does a business owner say, “If only I had someone helping me with X, I can really focus on Y?”.

Factoring companies provide more than funding for businesses. They take some of the most time-consuming tasks out of the owner’s hands, like checking customer credit and collecting on outstanding invoices. These jobs can take hours of your valuable time and often require additional staff to manage them. Different from a traditional loan, you get a team of back office support staff at no additional charge. These and other value-added services are included in your factoring fee. Be sure to talk to your factoring company about what other services they provide.

Young Businesses Need Protection from Bad Debt: Factoring Provides It

For a new business, extending credit to a customer who doesn’t pay can be harmful at best and devastating at worst. It’s important to screen your customers’ credit. A factoring company will do this for you before you take on new business so you can be assured that the client has the funds to pay.

This saves you time upfront so you don’t start projects for clients who can’t pay, and it also means that the factoring company can work with you to advance you funds when you complete the work.

Young Businesses Must Avoid Taking on Debt: Factoring Won’t Add to Your Debt

One of the biggest reasons that factoring is ideal for young businesses is that it provides the money you need without adding to your debt.

Factoring isn’t a loan – it’s a purchase of your invoice. The factoring company buys your invoice, takes out a nominal factoring fee, and issues any remaining monies when the client pays. That’s it. End of transaction. No debt to keep track of or payments to make.

That means there’s no need to list your factoring balance as debt. There are no interest rates or hidden fees either. In other words, factoring provides you with the predictable cash flow you need without adding to your debt.

Young Businesses Need to Grow: Factoring Helps

Growth opportunities don’t come along every day, but when they do, you’ve got to take advantage of them. New companies sometimes struggle to accept large orders or attract new customers because they don’t have the financial stability needed to do so.

Invoice factoring provides a solution by smoothing out cash flow and making it possible for business owners to pursue growth opportunities in the moment.

Learn more how Triumph Business Capital helps entrepreneurs get their businesses off the ground.

Starting a business requires a lot of hard work – and some help. While it can be difficult to get a young business off the ground, factoring can provide you with the stability, working capital, and overall assistance you need to make your new business a success.

Is factoring for you? Click here to find out how Triumph Business Capital can help your young business get off the ground.

Click here to learn how we can help your business thrive.

 

Factoring

How Factoring Can Get Your Business Through the Rough Patches

Every business has rough patches — times when money is tight, and you’re wondering how you’ll make ends meet.

As of 2019, more than half of all start-up businesses will fail within four years. A lack of money is the no. 2 reason that businesses fail. A lack of money can also lead to other issues, including:

  • Not being able to plan for the future
  • No money for ads or marketing to sell your services
  • Underestimating the competition

The good news is that invoice factoring can help provide small businesses with the working capital they need to stay afloat. Here’s what you need to know:

Invoice Factoring Provides Predictable Cash Flow

Unpredictable cash flow has hindered many small businesses. Without steady income, it can be difficult to maintain daily business operations, like:

  • Meeting payroll
  • Paying routine overhead expenses (rent, for example)
  • Buying raw materials
  • Hiring new employees
  • Updating software and hardware

Your company needs money to survive. When you choose invoice factoring, you won’t need to wait for customers to pay you. You’ll get cash when you issue your invoices, and that will relieve you of the burden of unpredictable cash flow.

Invoice Factoring Frees up Your Time

As a business owner, you know that when times are tough, you need to focus your energy where it’s most needed. Invoice factoring can help you do that.

Factoring companies provides business owners with the steady cash flow and back-office services they need, including:

  • Credit checks and approvals
  • Invoice collections
  • Payment processing
  • Financial reporting
  • Client portals for account management

With these essential tasks off your plate, you’ll be able to focus on providing top-notch customer service, attracting new business and (**hopefully**) growing your company.

Invoice Factoring is Available Even if Your Business Credit Isn’t Great

What if you’ve been struggling for a while and your business credit score has taken a hit? The good news is that invoice factoring is an option for you.

Invoice factoring companies have less stringent credit requirements than banks and credit unions. You don’t need to have a perfect business credit score (or personal credit score). Factoring companies purchase your outstanding invoices and collect from your clients. That means your clients’ credit score is more important than yours.

So even if your business has hit a rough patch, we can help you by providing the cash flow you need to get back on track.

Invoice Factoring Can Improve the Financial Health of Your Business

Most factoring companies provide credit and collection services as part of the agreements they have with their clients. That’s because we understand that business owners are focused on providing their products or services to their clients — not necessarily on chasing months’ old invoices.

  • Stop worrying about slow-paying customers
  • Work with clients with longer payment terms
  • Improve your AR
  • Make financial plans and investments based on expected income

Overall, these things combine to improve the overall financial health of your business, making it easier for you to achieve your growth goals.

The Rough Times Don’t Need to Bring You Down

Keeping a business afloat during a rough patch can be difficult. Partnering with a factoring company like Triumph Business Capital can remove the stress.

Click here to learn how we can help your business thrive.

 

What is invoice factoring?

Learn the Lingo: Common Terms Related to Invoice Factoring

If you’re new to invoice factoring, you might come across some terminology that you’ve never seen or heard beforeit can be a little bit like learning a new language. 

At Triumph Business Capital, we always want our clients (and potential clients) to understand what we’re talking about when we use factoring terms. With that in mind, let’s talk about what invoice factoring terms mean, so you can decide if factoring is right for your company. 

Factor/Factoring Company 

A factor or factoring company is a company that advances a percentage of the face value of an invoice to its customers. You sell your unpaid invoices to the factoring company, which then collects the outstanding balance from your client, the debtor (see below).   

For example, let’s say you’re a staffing company, and you just signed a long-term contract to supply developers to a large technology company. Great news for you, except that this tech company has 45-day terms.  

As a business owner, you have expenses, most importantly paying these developers every week. If you were to factor those invoices, you could get a debt-free advance on those invoices, while the factoring company waits out the payment terms and collects from your client.  

Most factoring companies also provide back office services including credit checks and collections. 

Invoice Factoring/Accounts Receivable Financing  

Invoice factoring and accounts receivable financing are interchangeable terms. Accounts receivable refers to your outstanding payments for work you’ve already completed, or services you’ve already rendered. When you work with an invoice factoring company, you are leveraging your accounts receivables and selling those in order to get an advance on your payment.  

Advance Rate 

The advance rate is the percentage of an invoice that the factoring company pays to the client when the invoice is factored. Advance rates can vary from client to client, but most range between 70% and 95%. 

Clients 

When you factor your invoices, the factoring company collects the outstanding balance from your client. It’s important to remember that you maintain your relationship with your client directly. Think of the factoring company as an extension of your accounting department, working on your behalf to invoice and collect from your clients.   

Factoring companies like Triumph Business Capital do not charge you based on the number of clients you have. In fact, your rate is determined by the number of invoices you factor and the total invoice amount. Typically, the more you plan on factoring (in terms of volume and total invoice), the lower the rate.  

Debtor 

Debtor is the term the factoring company uses to refer to your clients, the ones they will collect from. It’s a term that’s also used by collection services. Technically, a debtor is any party that owes money to another party. You may see the term ‘debtor’ on some of the reports you receive from your factoring company. 

Account Executive/Customer Service Rep 

An account executive is a factoring professional who’s responsible for the day-to-day management of the client relationship, and most importantly the ones verifying and purchasing invoices. These are the individuals or teams that you will work with regularly, so it’s important to develop a strong relationship with them.  

Factoring Fee 

The factoring fee is the amount discounted from your invoice that goes to the factoring company.   

Rates can vary among factoring companies and are dependent on different criteria. As mentioned, the more you factor, typically the lower your factoring fee.  

For example, if you submitted a $2,000 invoice at a factoring fee of 3%, you would get $1,940 advanced if you are in a non recourse contract, with the factoring company collecting $60.  

Recourse Factoring 

Recourse factoring has a lot to do with risk, and how confident you are in your clients’ ability to pay on time.  

In a recourse factoring agreement, you are 100% responsible for payment if your client doesn’t pay the factoring company. That means that even if there is a dispute, or the company goes out of business, you’re on the hook.  

Now because of the degree of risk involved, rates in a recourse agreement tend to be lower. But, before signing a recourse deal, make sure you’re prepared to pay back whatever you were advanced if your client fails to pay after the payment terms have been exhausted.  

Aging Report  

Your aging report, or invoice aging report, is a list of all your invoices that remain unpaid. The factor can provide you with this report as needed, and in some cases you may be able to run an aging report using your accounting software or your client portal.  

Most typically, an invoice aging report would list invoices by debtor (your customer) in descending order of invoice date. The oldest invoices would appear at the top of the list. It’s also possible to run an aging report showing only past due invoices. 

Non-Recourse Factoring 

Non-recourse factoring is, as you might expect, the opposite of recourse factoring. In non-recourse factoring, the factoring company takes on the risk associated with collecting an invoice. If one of your customers goes out of business or declares bankruptcy, the factoring company takes the loss.  

Since non-recourse factoring carries more risk for the factoring company (and you!) than recourse factoring, the fees are typically a bit higher than they would be for recourse factoring. 

Reserve 

The reserve is the portion of an invoice that is not advanced, minus the factoring fee. For example, if you factored a $5,000 invoice and had an 80% advance rate, you would receive $4,000 as an advance, When the invoice is paid, the reserve (in this case, $850) would be returned to you, minus your factoring fee. Again, let’s assume 3%, so $150.   

Conclusion 

Understanding factoring terms can also help you see how factoring your accounts receivable can help your business to grow. If you’d like to learn more about how Triumph Business Capital can help improve your cash flow, please click here now. 

Invoice factoring versus merchant cash advance

4 Key Differences Between Invoice Factoring and Merchant Cash Advance

Every small business owner knows that cash flow is the life blood of a company. With it, you can purchase raw materials and inventory, pay your overhead expenses and keep up with payroll. Without it, you may find yourself unable to fill orders or meet your financial commitments.

For these reasons, business owners seek out sources of funding that can help them meet their business obligations AND provide a consistent influx of capital to drive innovation and ultimately growth.

One method of financing that you may have heard about is a merchant cash advance, or MCA. On the surface, it sounds like it might be similar to invoice factoring – but is it? Let’s look at some of the biggest differences between the two.

1. Invoice Factoring is Less Risky Than a Merchant Cash Advance

There’s always some risk involved in financing a business. For the lender, the risk is that the business may miss payments or, in the worst-case scenario, fail to pay back their debt. And, for the business owner, the risk comes in the form of fees and interest.

When it comes to risk, there’s a big difference between invoice factoring and MCAs. Factoring advances money based on an existing invoice. The money that your customer owes for the product or service is advanced to you through the sale of your invoice to the factoring company.

By contrast, MCAs give you money based on an estimate of future sales. If your sales fall short, you’ll still need to repay the money. More than that, MCAs usually require access to your bank accounts so they can take out the funds automatically. If you’re already experiencing cash flow issues, this can make it worse.

2. Merchant Cash Advances Can Be More Expensive Than Factoring

You probably already know that a risky form of financing is likely to cost more than one that carries a low risk. So, it should come as no surprise that MCA loans can be far costlier than invoice factoring.

Factoring fees are a percentage of the invoice. There’s a basic fee that applies to each invoice factored as spelled out in your contract. If an invoice remains unpaid past the initial payment term between you and your client, you may be charged back the advanced amount.

MCA fees can be significantly higher than factoring fees. The fee is typically between 20% and 50% of the amount borrowed. Even if your sales match the predictions, you’ll still end up paying back significantly more than your initial advance.

Something else to consider, MCAs are considered commercial transactions, so they are not subject to the same federal regulations that banks are. While a 20-50% advance fee might be common, APRs can exceed 300%. Plus, the payment structure is already determined at the time of the advance, so you can’t pay it off early to stop the interest from accruing.

3. Invoice Factoring Maximizes Cash Flow and Merchant Cash Advances Don’t

Invoice factoring is a product that’s designed to help small business owners maximize their cash flow. That’s because it advances money against invoices that have already been fulfilled. When you factor an invoice, you get money immediately – often the same day – which you can then use to buy materials, invest in your company or make payroll.

By contrast, MCAs are speculative. They provide you with a lump sum, but if you use that money to pay off existing debts, you may find yourself caught in a vicious cycle of requiring another cash advance to pay off the first with the meter running on the second.

With factoring, you know your cost and fees upfront, and because it’s the sale of your invoice, there is no debt or interest to worry about.  It’s not a loan.

4. Invoice Factoring Includes Back Office Services, MCAs Don’t

When you get an MCA, all you’re getting is money. One of the most important differences between an MCA and factoring is your factoring fee includes some time and potentially money-saving back office services that can help your business grow.

For example, factoring companies typically provide services that include billing and invoice collection. It can be quite expensive to pay someone to make collection calls on your outstanding invoices. Experienced factoring account executives work as an extension of your team and on your behalf.

Conclusion

Overall, invoice factoring can be a less expensive and more comprehensive financing option than a merchant cash advance. If you would like to speak to us about how invoice factoring can help your company grow, contact Triumph today.

Invoice Factoring

Dos and Don’ts to Keep in Mind When Choosing the Right Factoring Company

As a small business owner, you know that staying on top of cash flow can be a challenge. Without adequate cash flow, you may be unable to meet your financial obligations and, as a result, your growth can stall. As we’ve discussed in previous blog posts, partnering with an invoice factoring company can help small businesses even out their cash flow. In fact, factoring companies can help small businesses bridge invoice payment gaps, from completing a project or service through payment. However, as is the case with any financial service, not all providers have the same quality and results, and it takes time and research to determine which company will help best meet your small business’s financial goals. Here are just a few dos and don’ts to remember when looking for an invoice factoring company.

DO: Consider online features and overall ease of access.

Accessibility is a major feature for many of today’s factoring clients. It makes sense. It is essential for your business to be able to access vital information about your account as needed. You also need the ability to get in touch with customer service in case an issue arises. In many cases, the way your factoring company communicates with you speaks volumes about how your own clients perceive your business, so take time to ask the right questions about online features and overall accessibility. Ideally, you should be able to:

  • Access your account online at any time of day
  • Get reports and other information easily and quickly

If you’re concerned about accessibility, ask about a factoring company’s client portal and any additional technology that can make submitting invoices and getting paid as easy as possible.

DON’T: Neglect to determine whether recourse or non-recourse factoring is ideal for your needs.

Recourse and non-recourse factoring are different processes. Non-recourse is typically the safer option for businesses because it offers some protection if your client declares bankruptcy. Smaller operations tend to be the best fit for non-recourse as many lack the size and cash flow to handle non-payment from a client. You should ask about the comparative rates for recourse and non-recourse factoring, as well as the details of how recourse factoring works.

DO: Look at value-added services and affiliations

There are several hundreds of factoring companies, and all offer the same basic promise: to give you your money as fast as possible. But many factoring companies also provide a variety of additional services that can help your day-to-day business operations. For example, invoice factoring companies will typically offer collections services on your outstanding invoices. This means that in addition to getting an influx of cash, you also don’t have to spend time chasing down your clients hoping they pay. Another service factoring companies provide are credit checks on potential clients. Do you ever worry whether or not a prospective client has the funds to pay you? When you work with a factoring company, they will perform a basic credit check to ensure the client is likely to pay you.  Now you can accept that job or contract with confidence. Be sure to ask about any other partnerships or offers a factoring company might have with other businesses. Many times, you can get discounts or free trials to helpful business tools or resources just by signing up. With so many companies, it can be tricky to do a true apples-to-apples comparison. Don’t be afraid to ask questions if you’re unsure how a company’s contract works.

DON’T: Rush the process or make a hasty decision.

Finally, don’t rush the process of choosing a factoring company as your partner. Take a couple of days to see which company has the best potential to help your business. You’re signing a contract, so you’ll be on the hook for what it says. Take time to review any language, and make sure you know the expectations.

Ultimately, it’s up to you to be vigilant in your search to find a provider that will work alongside your business every step of the way to help you achieve financial efficiency and consistent cash flow. For more information contact Triumph Business Capital.

Invoice factoring

Invoice Factoring: A Beginner’s FAQ

There are more than 30 million small businesses in the United States, and no two are exactly the same. However, there are some problems that are common to many small businesses and one of those is money management. If you have issues with cash flow or financial management, it can negatively impact your business in multiple ways if you don’t address them quickly. They can impact your sales, your growth and your profits. Invoice factoring is a form of financing that can help by providing near-instant cash flow for your outstanding invoices. Factoring services have helped countless businesses get back on their feet and achieve their goals. We’ve created this quick and easy FAQ to help you learn more about the invoice factoring process and whether it’s right for your business.

What is an invoice advance?

An invoice advance is the general term for the money given to you ahead of time (or in advance) by an invoice factoring company. The advance is what provides your business with the near-immediate influx of capital that it needs to stay afloat and continue to grow. The advance will be repaid to the factoring company when they collect your invoice. The factoring fees are deducted during this process.

What determines if a business qualifies for business factoring services?

Businesses invoice factoring services are available to a variety of businesses with all different types of financial situations. Approval is largely based on your customers’ credit worthiness. For this reason, invoice factoring isn’t limited to a particular industry or size of business. If you have credit-worthy clients, you can work with an invoice factoring company. Even businesses that have a significant volume of accounts receivable work with invoice factoring companies for their working capital solutions.

Is invoice factoring only an option when a business is in serious financial trouble?

Invoice factoring can be used as a flexible cash flow solution for businesses of all financial situations. Some young businesses use invoice factoring services because they don’t have enough credit to qualify for traditional forms of financing. Other businesses work with invoice factoring companies because they enjoy the predictability of payment. When you know when you’re going to get paid, you can make decisions faster, pay vendors faster and spend less time following up with clients for payment. Factoring can also help those who want to avoid potential cash flow issues in the future. For this reason, invoice factoring services are readily available for any business that wants to take control and gain financial freedom and flexibility.

How quickly can you get a cash advance after submitting invoices for factoring?

The factoring process is designed to be quick and seamless. When you submit invoices, the factoring company will verify them. Verification can include reviewing a purchase order, tracking a shipment, or communicating directly with your customer. In many cases, you’ll be able to get a cash advance the same day you submit the invoice for factoring.

Ultimately, you may be surprised at the wide range of benefits that financing factoring can provide. If you want to learn more about what invoice factoring can do for your business, contact Triumph Business Capital.

Invoice funding

Don’t Sign an Invoice Factoring Contract Without Asking These Questions

As we’ve discussed in previous blog posts, invoice factoring is a type of accounts receivable financing that converts outstanding invoices — due within 90 days — into immediate cash for your small business.


But before you sign any type of contract or agreement for an invoice advance loan, it’s essential to ask the right questions to understand what services you’re getting for your money. If you’ve signed any contract before, you know that it doesn’t matter what was discussed; what matters are the terms you agreed to when signing at the bottom.

As a business owner, you sign a lot of documents, and it’s common to breeze past the fine print and take the sales person’s word for it. With that in mind, we’ve collected a few important questions to ask your invoice factoring company before signing a contract.

How long has the invoice factoring company been in business?

If a company has been around for a while, you can typically trust that they’re not going to close shop and disappear with your money. And when you’re trusting your invoicing and collections to a third party, it’s important to partner with a company that has the necessary experience, structure and team to handle your business.

Remember: invoice factoring companies become an extension of your business and work on your behalf to invoice and collect from your clients. This relationship requires professionalism, respect and a high-level understanding of different industries. These skills are not learned in a day of training. They are part of a company culture that puts an emphasis on customer-first service.

It’s important to mention that years in business don’t always translate to success. But if a company has been around for a while, you know that it’s survived economic downturns in the past and can likely weather ones in the future as well.

How are the fees structured?
Each and every funding company structures their fees and finances differently, so it’s absolutely vital to make sure you understand every word of the contract when it comes to the way your business will be charged and paid.

Invoice factoring companies offer different funding products based on industry, size and growth goals. Some things that might affect your factoring fees:

  • Length of contract
    • It shouldn’t be surprising to learn that the longer you sign up for a service, the less your fees will be. Invoice factoring is no different. Most companies offer month-to-month, 6-month and year-long contracts. If you’ve never used an invoice factoring service before, it might make sense to start with a month-to-month and then upgrade to a longer-term deal and save some money.

  • Type of product
    • Invoice factoring has different options for different business types, but the two most common are recourse and non-recourse. Recourse factoring tends to be cheaper because the client assumes the risk of non-payment. For example, if your client fails to pay back the agreed upon amount because they went bankrupt, the factoring company will charge that back to you. Recourse is a great program if you have established clients who pay on time.

For startups and less established businesses, a non-recourse agreement might make more sense. In this arrangement, the factoring company takes on all the risk of non-payment if the business goes bankrupt. So even if your client doesn’t pay, the factoring company will not charge back the unpaid invoice. The fees associated with this product might be a little bit more, but it also provides you with more confidence and peace of mind.

Regardless of product or type, you need to know how the fees are structured. When you get your contract, read it again and again until you come away confident knowing what it says. Once you sign, you’re not likely to be able to make changes.

According to the Wall Street Journal, “The factor advances most of the invoice amount … after checking out the credit-worthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction (or factoring) fee.”

Again, each company is different, so take all the time you need to ensure you understand your financial obligations.

Are they committed to excellence? 

You work hard to make a name for yourself and to set your business apart from your competition. Wouldn’t you want to work with an invoice factoring company that has the same goals?

The fact is, industries change. Business models should be constantly reevaluated and tweaked to better serve the customer.  In today’s world, you need a business partner that exercises a high degree of flexibility and is able and willing to adapt with the times.  Look for a factor that’s a pioneer in their space and is constantly looking to add more value to your business.

Can the invoice factoring company help to grow your business?

The answer to this should almost always be ‘yes.’ At a minimum, an invoice factoring company should be providing your small business with the immediate cash flow it needs to grow and evolve to reach its full potential.

Many factoring companies have industry partnerships and referral partners that offer products and services that can you can take advantage of at a discount. Be sure to ask the factoring company if they have existing relationships with other businesses that you can leverage for your business.

All of this boils down to the factoring company taking an interest in your business’s long-term success.

Ask yourself, “Do they care about my business? Or, do they just want my money?” Every company has to make money. Otherwise, they cease to exist and can’t help anyone. But, if they’re committed to the success of your business, they’ll take the approach that if you don’t succeed, they won’t succeed either. Choose a factor that is knowledgeable and passionate about your industry and theirs. In return, they’ll be passionate about your business.


Get Started with Triumph Business Capital

Ultimately, keeping these questions in mind can help you scope out the best invoice factoring business and contract. For more information about invoice factoring or invoice funding, contact Triumph Business Capital.

Invoice-factoring-what-you-need-to-know

Invoice Factoring 101: What You Need to Know

Knowing more about your invoicing process is essential to helping your business thrive

An illustrated image the details the invoice factoring process.

Invoice factoring 101

What is invoice factoring? 
Invoice factoring can be particularly useful for small businesses looking to keep their cash flow moving and their resources consistent. Invoice factoring helps B2B companies boost their cash flow based on their outstanding invoices. This means immediate access to your money without having to wait for payment from clients, which could leave you waiting for 90+ days.  
 
How does invoice factoring work? 
Invoice factoring is the process of providing you working capital through the selling of your accounts receivables. You get your money immediately — AND DEBT-FREE — at a discount. According to the Wall Street Journal: “The factor advances most of the invoice amount … after checking out the creditworthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction fee.” Invoice factoring provides immediate access to the majority of funds that your customer owes you, allowing you to keep your business operating as normal. This is especially helpful with businesses struggling with slow-paying clients. 
 
What does “factor rate” or “factoring fee” mean? 
When a factoring company advances you money based on your outstanding invoices, it will charge a small fee. The percentage of these funds that goes to the factoring company is what’s known as the factor rate or the factoring fee.  
 
For example, if a factor rate on a $10,000 advance is 3%, the company would take $300 as a fee. Remember, this is debt-free capital that you can use to make investments, purchase equipment or pay your staff. Usually, the rates will range between 1% and 5% depending on various criteria. Invoice factoring can be a useful service for small and large businesses alike looking to keep their cash flow consistent.  

Work with an established factoring company

Triumph Business capital is a recognized industry leader. For nearly 15 years, we’ve partnered with small to medium-sized businesses to simplify and strengthen their operations. Getting started with an invoice factoring company is easier than you might think. Our team of experts is here to walk you through the application process, contact Triumph Business Capital.

Invoice factoring application

What Small Businesses Should Know About the Invoice Factoring Application Process

Working with commercial invoice factoring companies has numerous benefits and can provide near immediate cash flow for your business. In fact, factoring companies can help small businesses bridge invoice payment gaps with upfront payments, providing nearly all of the original invoice amount. That money is then immediately available for you to use to fund your business operations — make payroll, invest in new equipment, pay vendors, etc.

But as is the case with other types of commercial financial solutions, applying for invoice factoring services requires a certain level of thoroughness and attention to detail. The more you know before, the faster the process will be. Ultimately, that means quicker access to working capital for your business.

Here’s what businesses need to know about the invoice factoring application process.

Know Your Company’s Financial History & Business Setup

Before you meet with any specialists or submit any applications, it helps to have a solid understanding of your company’s financial history. Some questions you might be asked:

  • What type of work do you do?
  • How many current clients do you have?
  • What is your monthly revenue average?
  • How much do you have in outstanding invoices?
  • Do you have any liens or judgments against your business?

Be prepared to answer these questions and provide documentation to support them.

Meet with an Invoice Funding Specialist

Before you submit your official application, you’ll likely be required to consult with an invoice factoring services specialist about the options that are best for you based on your business’ financial history and needs.

There are a few different types of factoring services available, and in addition to determining whether your business is eligible, a specialist can determine the best type based on business your needs.

Your rate is going to be based on the information that you provide during these conversations, so it’s critical that you’re upfront about any potential red flags like bankruptcies or tax liens. They’ll come up on a routine credit check anyways. Remember: when you’re applying for invoice factoring services, more goes into the approval process than your credit history. Past issues may not disqualify you from getting the funds you need.

Understand the Contract and Commitment

Finally, be aware of the specific terms of the factoring agreement that’s offered to you. Some factoring companies require you to submit a minimum amount in invoices each month. If you don’t meet that amount, you may be charged a fee.

Also, remember that you’re selling your invoices to a factoring company, which then collects that outstanding amount from your client based on the terms of your contract. If your client doesn’t pay that amount by the contract date, you may be charged back by the factoring company.

These and any other fees should be listed clearly in your contract. Read your contract to make sure that it matches everything discussed. Then, read your contract again. Once you sign your contract, you have little to no chance of making changes. Make sure you know what you’re signing.

Work with an established factoring company

Ultimately, getting started with a small business invoice factoring company is easier than you might think, but only if you have a good understanding of your company’s past and present financial situation.

For more information about commercial factoring companies, contact Triumph Business Capital.

Bad debit

How to Know if Your Small Business Has ‘Bad Debt’

Economies are unpredictable and demand for certain products or services ebbs and flows depending on any number of reasons.

Bankruptcies in the U.S. increased to 25,227 companies in the second quarter of 2016 alone. It’s important to stay on top of corporate finances, especially in the early stages of business development and avoid ‘bad debt.’ Bad debt is money that you can’t recover — a client doesn’t pay you for work you’ve done, for example.

Even a small amount of bad debt can build up and slowly chip away at your business’s financial security. With that in mind, here are just a few of the top signs indicating your business may have ‘bad debt.’

Unreturned Messages

It’s one thing for you to get a client’s voicemail once in a while, but if they seem to be avoiding your calls left and right, consider it a red flag. If business owners had the funds or a plan to pay, they would speak to you directly to avoid misunderstandings and stop the phone calls.

We all know business owners get busy, and sometimes reaching out to them by email might be more helpful. If you still can’t get a response, it may be time to send the account to collections, or if the financial situation is urgent, consider working with an invoice factoring company, which specializes in advancing you the money and working with your client to collect payment.

Repeated Excuses

Flexibility is a necessary trait for all business owners. If a client forgets to pay once, or is a day or two late, you can be a little bit more forgiving.

But if you notice that the same client is late or fails to pay, it could be a sign of something deeper. While you might think you’re being helpful by extending time for your clients to pay, but you could be jeopardizing your business if it drags on, and if it’s frequent.

Remember — you run a business. You need money for your business and to pay yourself. In order to maintain credibility and minimize time between invoicing and collection, you need to be firm on your payment terms. If a client consistently misses payment deadlines, it might be best to send that for collections and move on from that client.

Change of Company Ownership

This is a sign that only applies to corporate clients, but it’s worth mentioning. If a company undergoes a change in ownership or upper management, they may know nothing about the company’s past debt and therefore feel no obligation to honor it. In other cases, the company takes on the debt with the purchase. Either way, look out for this red flag when it comes to past debt.

While dealing with bad debt is never easy, you should know that you have options that can help. Invoice funding, or invoice factoring as it’s also known, is designed to provide fast cash flow to your business. For more information about hiring invoice funding companies for small business invoice factoring services, contact Triumph Business Capital.

 

Invoice payments

Tired of Late Invoice Payments? These Strategies Can Help

It may sound shocking, but it’s true: Nearly 60 percent of invoices are paid late. Considering the fact that small businesses (defined as businesses with fewer than 500 employees) account for 99.7 percent of all business in the United States, late invoices are often a sign of a bigger financial issue. Invoice payment and collections are often the most challenging part of a small business owner’s day-to-day operations. You’ve done the job, and now you need to get paid. Some clients are slow to pay, and other larger companies have established payment terms of 30 days or more.

You can’t run a business on a promise to pay. You need capital just to keep your business going. How many times have you said, “If I could get paid for that job or service today, I could do X, Y or Z.”

Sometimes X is paying your team, and Y is buying a new piece of equipment that’s going to help your business become more efficient. You’re trapped and so is the money tied up in your unpaid invoices.

Late invoice payments can be problematic for small businesses in need of immediate financing. Often, small business owners sabotage their own success and growth by not having clear expectations about their payment terms. They are excited about having the business, but don’t hold their clients accountable for paying on time.

There is, however, a wide range of solutions available that can help your business collect the money it receives. Here are just a few proven strategies that can reduce late invoices for your business.

Set Rigid and Non-Negotiable Deadlines

While you don’t want your business to come off as overly demanding or money-hungry, your customers need to realize that you need cash flow to stay afloat. Ask yourself: “Would my client wait an indefinite amount of time for payment from its clients?”. Of course not and neither should you.

Start by being very clear about the way you communicate invoice policies to your clients. Use deliberate language that portrays to the customer that you’re a reputable business that relies on customers to pay their invoices on time. The policies and due dates should be non-negotiable, and instead of giving them a number of days to pay (30, 60, 90), give them one solid date to serve as a rigid deadline before they incur a penalty. All of this should be spelled out clearly in your terms.

Automate the invoice payment process

The best way to manage your invoices and enforce your invoice payment policies is to automate the process. As soon as you’ve completed the work, submit your invoice. Then, allow whatever app or service send regular reminders as the due date approaches. It’s also helpful to include gentle email reminders that they will incur a late fee penalty if they pay late. Again, allow the technology to handle that for you. Many services will automatically update the invoice to reflect the late payment into the total.

Using technology gives you a consistent paper trail to reference if you’re client is slow to pay, and it allows you to focus on other areas of business without having to waste time on a phone call or updating an invoice.

Consider Small Business Factoring Solutions

If your business has tried the method listed above and is still having some trouble getting customers to pay their invoices on time, consider small business invoice factoring as a solution to cash flow issues. Invoice factoring is a type of accounts receivable financing that converts outstanding invoices due within 30 to 90 days into immediate cash for your small business.

A graphic that says 82 percent of businesses fail because of a cash flow problem sits on top of a picture of two business people speaking.

 

Knowing how to stay diligent in keeping up with invoice payments can help your business stay on top of finances. For more information about factoring company, freight or invoice funding companies, contact Triumph Business Capital to discuss how small business factoring can help with your invoice payments.

 

Small business cash flow problems

Exploring Common Small Business Cash Flow Problems (And Their Best Solutions)

Small businesses (defined as businesses with fewer than 500 employees) account for 99.7 percent of all business in the United States, making them a fundamental part of the economy. But anyone who’s ever owned a small business can tell you that it’s not always easy to stay afloat when it comes to competition and cash flow. Bankruptcies in the U.S. increased from 24,000 to more than 25,000 between the first two quarters alone in 2016, so if your business is struggling to make financial ends meet, we have some suggestions for improving your small business cash flow.

There are several viable solutions that can help you stay afloat, even if you’ve hit some momentary bumps or you’re dealing with clients who are taking weeks and months to pay. Here are some of the most common cash flow problems small businesses face as well as how to best resolve them.

Lack of Funding

Many small businesses experience a lack of funding at some point or another, but it can stem from several causes — not enough business, clients not paying, spending more than you’re making.

One solution — if you have the credit — is to apply for a small business line of credit, which is similar to how a typical credit card works.

In a small business line of credit, you pay interest on your outstanding balance only, rather than the total line of credit. Your available credit increases and becomes available for borrowing once you pay down your balance, just like a credit card.

As mentioned, you typically need to have a high enough credit score to get approved for a business line of credit. For this reason, new businesses can struggle to gain momentum early on because they don’t have sufficient business and credit history.

Generating new business is difficult if you’re a startup or a young company with no industry reputation to leverage. You’re competing against other companies with years of experience on you, and you have no easy way to get your name in front of potential clients without having money to spend on advertising, which can be costly. And because you’re unestablished, you can’t turn to banks.

Most companies hit rough patches, and their credit can take a hit if they don’t have the funds to pay their bills because clients aren’t paying on time. This limits the amount of funding options available for small business owners.

Poor or no credit history is one reason why many small business owners are turning to small business invoice factoring to increase their cash flow. Invoice factoring is a type of accounts receivable financing that converts outstanding invoices due within 30, 60, or 90 days to improve your small business cash flow.

Unlike a bank loan, invoice factoring doesn’t hold your credit history against you. Instead, factoring companies look at the credit of your clients when determining whether you qualify. This could be a solution for small businesses looking for capital without using banks.

Late Invoices

Nearly 60 percent of invoices are paid late, causing a potential chain reaction through your business and your personal lives. If clients pay late, you pay your bills late, your credit suffers, and the snowball continues.

Many small business owners do not have the savings necessary to float payroll, vendor payments and other business operations for weeks or even months. Your clients may have existing terms that make it difficult for you to predict when you can pay your people or your bills.

Small business invoice factoring can help here, too. If you have unpaid invoices in hand, the factoring company will fund you most of that total, minus a small fee, and then work with your client on payment. As a result, you get your money, and you get back the time you’re losing trying to collect from your client.

Ultimately, understanding these common small business cash flow problems and solutions can help you make the right decisions for your financial needs. For more information about hiring top factoring companies, contact Triumph Business Capital.

 

business credit scores

3 Ways Invoice Factoring Will Affect (Help!) Your Credit Score

Your business credit score is something that can have a huge impact on how you’re perceived by your customers, competitors, and potential lenders and investors. The higher your score is, the more credible and trustworthy you’ll seem.

Invoice factoring is a form of business financing that can impact your credit score. At Triumph Business Capital, we get questions from business owners who are concerned that factoring their invoices will have a negative impact on their credit score – and yet the opposite is true. Here are three positive ways that invoice factoring can affect your credit score.

#1: Get Business Capital without Lowering Your Credit Score

If you apply for a business loan or line of credit, the inquiry itself – even if you aren’t approved – can have a negative impact on your credit score.

Factoring is different because it provides an ongoing source of capital by advancing money on your invoices. As soon as you complete work or ship an order to a client, you can factor the invoice and get your money immediately.

That cash flow doesn’t require a check of your business credit score. In other words, factoring your invoices can give you the money you need to grow your business without your credit score taking a hit.

In turn, invoice factoring can increase the chances that down the line, you’ll be able to qualify for additional financing.

#2: Pay Your Bills on Time – or Early

The single biggest factor in determining your business credit score is the timeliness of the payments you make to your creditors and vendors. It’s common for small and medium-sized businesses to wait until they get paid to make good on their bills. The problem with this approach is that it inevitably leads to delinquency – and ultimately, to a credit score hit.

Factoring your invoices provides you with the day-to-day cash flow you need to pay your bills on time. You may even be able to pay them early, increasing your credit score and making it easy for your business to qualify for credit terms with your suppliers – or even to raise your credit limits, so you can accept and fulfill large orders to grow your business.

#3: Increase Your Credibility with Customers and Lenders

A solid credit score increases your credibility. Anyone who’s considering doing business with you, whether it’s a supplier, a vendor, a customer, or a lender, will likely check your business credit score to see how you run your business. A high score, while not the only consideration, helps secure their trust.

Another way of looking at it is that a low credit score is very likely to have a negative impact on your business. Factoring your invoices provides the financial stability you need to increase your score and build financial credibility over time.

Get business credit help from Triumph Business Capital

You don’t need to worry that factoring invoices will hurt your company’s credit score and credibility. In fact, the regular cash flow and financial stability that invoice factoring provides can help you increase your score, attract new customers, build credibility, and grow your business.

To learn more about Triumph’s factoring services, contact a representative today. We help thousands of business owners from different industries get the working capital and business credit help they need to grow their businesses.

Transportation Company Invoice Factoring Tips

Choosing a Factoring Company for your Trucking Business?

Nearly 12 million trucks, rail cars, locomotives, and vessels move goods over the transportation network. Commercial transportation requires a great amount of attention to detail, which is just one reason so many professionals have been relying on services from transportation factoring companies and other types of small business factoring. Invoice factoring is a type of accounts receivable financing that converts outstanding invoices due within 30, 60 or 90 days into immediate cash for your small business, and if you feel as though it could be a good fit for your business needs, it’s important to find the right provider for you.

Remember that not all invoice factoring companies offer the same services or programs, so it’s important to find the right company that meets your current needs before signing the contract.

Ask: What’s included in the invoice factoring fee?

It’s easy to assume that the invoice factoring company with the lowest fees wins. But, as an owner-operator, you know that just because something is cheaper, it doesn’t mean it’s better. You have to consider and understand what’s the behind the cost.

Some invoice factoring companies offer promotional discounts or have minimum requirements you have to meet each month to qualify for the lower fee. It’s important that before signing an invoice factoring contract that you read and then re-read your agreement to understand how it’s structured. Like most business contracts, there’s not a lot you can do once you’ve signed it.

Also, ask your factoring company what other back office solutions they help you with. Most factoring companies include additional services included in their fees. So, unlike a bank loan, you’re getting more than just money. You’re getting a team of trained professionals who work with brokers and shippers every day and understand the transportation business. That means that instead of being tied up on calls with brokers asking about payment on a load from three weeks ago, you’ve already been paid on that load, and your factoring company works on your behalf with the broker to make sure it’s paid.

According to a U.S. Bank study, 82 percent of businesses fail because of cash flow problems. Trucking companies can’t afford to be waiting for their money. You can’t afford to wait on payments from multiple brokers who might take 30 to 60 days to pay. Invoice factoring companies make sure that you’re paid and provides additional support with your clients.

Look at the business invoice factoring company’s reviews and overall reputation.

In addition to comparing rates and services, it’s also essential to try to access some direct feedback from satisfied (or not so satisfied) clients. This can give you a more realistic idea of what it’s like to communicate with and conduct business with the provider. If possible, try to find reviews and feedback that’s not directly from the company website — these are more likely to be filtered for positivity.

CAUTION: Not all reviews are going to give you the complete picture. You know as a business owner that public reviews can be misleading or not give all the details of a problem. Also, look at the total amount of reviews. If a company only has a handful of reviews, it may not give you a good sense of the company’s service and professionalism.

Reviews can be helpful, but also ask other drivers in the industry. Those referrals will probably give you a fairer review of their company.

Don’t wait until it’s too late

How big of a deal are late payments? It’s been estimated that if all invoices were paid on time, U.S. small businesses could collectively hire 2.1 million more employees, which would reduce unemployment by 27 percent.

What could you invest in your trucking business if you knew you were going to get paid within one to days instead of waiting a month or more? The right business factoring services can help you with your cash flow that will help your present and future business plans.

If you’re looking for invoice factoring services for your trucking business, contact Triumph Business Capital today. We’ve helped thousands of owner-operators get the money they need for their business. We can help you, too.

 

Trucker Owner Operator Tips

7 Tips to Help You Thrive as a Trucking Owner-Operator

As a trucking owner-operator, you know that running a successful business requires you to wear many hats. You’ve got to be thinking about everything from gas mileage to depreciation to cash flow.

The new year is here, and that means this is a good time to look to the year ahead and think about what you can do to make it your most successful year yet. We’ve put together a list of seven tips that can help you thrive as an owner-operator.

#1: Manage Your Fuel Costs

Regardless of what your truck is carrying, one of your biggest expenses is fuel. The mistake that many owner-operators make is confusing the lowest pump price with the lowest fuel cost. They’re not the same thing.

The reason, as you know, is that you must pay state taxes on the fuel you use as you drive through the state. When you buy gas, the pump price includes the base price per gallon plus that state’s taxes.

To save money on fuel, look for the lowest base prices and plan your fuel purchases to take advantage of them.

#2: Support Your Rates

Creating a budget as an owner-operator means estimating both your fixed and variable costs. You may need to justify your rates to potential clients. For that reason, it’s important to understand the trends both in the trucking industry in general and in your niche in particular.

One thing that can help is getting a handle on fuel prices. The US Department of Energy has a fuel price tracker that you can find here. You can also back up your prices by knowing the going rates for specific lanes and any other influencers that may impact your pricing.

You may even be using tools that already give you this information. DAT, for example, provides for its subscribers the 90-day average on loads, so you have a baseline to go off of when negotiating.

#3: Focus on Fuel-Efficient Driving

There’s a lot of debate among owner-operators about the most efficient way to run a business. One frequent topic of discussion is speed. Is it more efficient to drive fewer hours at a higher speed, or are you better off with a lower speed?

When it comes to fuel efficiency, you’ll get more miles per gallon of fuel if you drive steadily at 60 mph than you would if you took more breaks and drove at 70 mph. For example, if you paid $3.00 per gallon for gas:

  1. Driving 10,000 miles at 70 mph would yield an mpg of 5 miles and you’d pay $72,000 for fuel; and
  2. Driving 10,000 miles at 60 mph would yield an mpg of 5.5 miles and you’d pay only $65,000 for fuel.

In other words, you’d keep $7,000 in your pocket that you would have spent on fuel just by driving at a slightly slower speed.

#4: Use the Right Strategy for Buying Trucks

Buying a truck requires understanding the vehicle’s performance, mileage, and other factors. While you can certainly buy a new truck, there are some things that you should keep in mind if you do – and some compelling reasons to consider a used truck instead.

Let’s start with mileage. If you’re talking to a salesperson, remember that it’s in their best interest to paint a rosy picture of the truck’s MPG. It’s your job to have a realistic view of MPG based on:

  1. The load you’re carrying
  2. Road conditions
  3. Engine power

You should be buying a truck based on its efficiency, power and reliability. Don’t allow yourself to get distracted by bells and whistles that add to the price of the truck and take money out of your pocket.

Keep in mind, too, that there are some real benefits to buying used trucks instead of new ones. You already know that buying a new vehicle means taking a big depreciation hit. When you buy used, the previous owner absorbs most of the depreciation.

Matt Douthit, the founder of truck driver career site CDL 101, recommends looking for a truck with about 200,000 miles on it. You should pull the Electronic Control Module (ECM) report to see how the truck has performed in the past.

Whether you buy used or new, it’s essential to do research. Ask other owner-operators about the truck you’re considering and learn as much as you can about its likely performance before you buy it. That way you’ll have the best possible chance of ending up with a truck that’s efficient, reliable – and most importantly – profitable.

#5: Take Advantage of Downtime to Service Your Truck

Trucks require routine maintenance, and one of the biggest mistakes that owner-operators make is waiting until something is wrong before taking their rig into the shop. It’s inevitable that you’ll have some downtime in 2019. Those quiet periods are the ideal time to have your truck checked out and take care of needed repairs and maintenance.

You can also use your downtime to take care of other routine duties like creating and mailing invoices, calling on past due accounts, and tracking your company’s financial progress.

#6: Work Directly with Shippers When Possible

You probably have a list of brokers you work with, but if you’re not working with shippers directly, then you’re missing out on a money-making opportunity. If you can land a few direct clients, you can charge them a price that’s similar to what a broker would charge but keep the entire fee for yourself instead of paying a commission.

It will require a bit of strategic marketing to connect with direct shipping clients, but it can make a big difference in your net profit. It can be especially beneficial to connect with direct shippers if you specialize in a particular niche or type of load, since you’ll have less competition than you would otherwise.

#7: Set Yourself Apart from Other Owner-Operators

Our final piece of advice is to find a way to differentiate yourself from other owner-operators. For example, you might:

  1. Own a specialty trailer that’s only used for specific types of loads
  2. Have experience with handling hazardous or niche loads
  3. Hold special permits that allow you to do work that other owner-operators can’t

If any of these things apply to you, then you can use them to your advantage by seeking jobs that other owner-operators can’t accept. And, if they don’t apply to you, there’s an opportunity to spend part of 2019 doing what you can to buy new equipment, get some continuing education or acquire a specialty permit.

2019 Can Be Your Best Year Yet as a Trucking Owner-Operator

The seven tips we’ve outlined here can help make 2019 your most profitable and successful year to date as an owner-operator.

At Triumph Business Capital, we help thousands of owner-operators with their cash flow every single day. Our team of back office professionals helps support your trucking business by creating and mailing invoices, calling and collection on past due invoices, and giving you the tools to better track your company’s financial progress.

If you’re stuck waiting 30-plus days to get paid and looking for a team to support your business growth, contact Triumph Business Capital today.

Freight bill factoring

Triumph Business Capital’s Complete Guide to Freight Bill Factoring

Is cash flow an issue for your trucking business? If so, you should consider freight bill factoring. You need funds to pay expenses and grow your business, and you can’t always afford to wait 30, 60, or even 90 days for customers to pay. Fortunately, invoice factoring can help bridge the gap between when you dropped off a load, and when you get paid for it.  

To give you a better understanding of freight bill factoring, we’re breaking down everything you need to know, from the application process to the benefits and more. 

What is freight bill factoring? 

Freight bill factoring (also known as trucking factoring) is an accounts receivable financing solution that helps trucking company owners improve their cash flow. Essentially, you sell your invoices to a third-party factoring company and quickly receive your funds back (minus a small factoring fee) for your load, so you’re able to use it for day-to-day operations. With freight bill factoring, trucking companies can immediately access funds from slow-paying freight bills.  

Freight bill factoring is not a business loan. Instead, it’s a form of invoice factoring. Invoice factoring is both a short-term and long-term solution, and it’s a popular option for cash flow management. It’s an advance based on your invoices. With this advance, you’re able to pay your bills and expand your operations without borrowing funds or taking on new debt.  

How does freight bill factoring work? 

While trucking factoring involves a particular process, it’s actually very quick and simple. First, you’ll deliver your load as usual. After that, you’ll send a copy of your invoice to a factoring service after you confirm that you’ve delivered the load. If the invoice is approved, the factoring company will deposit money directly into your bank account in as little as 24 hours. After you receive payment, the factoring company will work with your client for payment.  

Before deciding on an agreement, it’s important to remember that there are different types of factoring programs with different terms and expectations. Make sure you ask about some of the benefits of each program, and how it might affect your business before signing.    

Non-recourse factoring ensures that even if your customers are slow to pay, you’ll be able to fill any cash flow gaps. This is because the factoring company assumes responsibility and protects your business from customer insolvency. That means if your customer goes bankrupt, the factoring company will not attempt to collect those unpaid invoices from you.   

While non-recourse factoring is a great option for small, independent owner-operators, larger companies will typically use recourse factoring because of their potential reserves to get them through any delays in payment. In a recourse agreement, the factoring company does not offer the same protection in the event your customer goes bankrupt. For that reason, recourse agreements tend to be less expensive, in terms of rate, because the trucking company is assuming the risk of nonpayment from insolvency. 

Recourse factoring is a great option if you know your customers will pay in a timely manner.  

Recourse and non-recourse factoring have their similarities and differences, so carefully decide which type of factoring will benefit your company. 

Invoice factoring helps with fuel advances and fuel cards 

While you’re on the road, you may need additional cash to cover costs. This is why, when business owners look for factoring companies, they often search for those that offer fuel advances and discount fuel cards. Once you pick up a load, you can receive money to pay for fuel and other expenses. If you want a fuel advance, all you need to do is send a request that includes rate confirmation and a bill of lading. Once the request is approved, you’ll receive the advance in as fast as one hour. 

When a factoring company provides you with a fuel advance, you won’t have to worry about negotiating an advance from a broker or shipper. This way, you can keep your trucks on the road and take on more loads with a predictable amount of money, even if you’re low on funds at first. When you begin to work with a factoring company, you’ll also be eligible for the fuel card program. A card gives drivers fuel rebates at major truck stop pumps across the country.  

Some invoice factoring will even let you split your payment across different payment methods. Say you were paid $1,000 for a load. You can choose to get paid $500 to your fuel card and have the other $500 go to your bank account. A fuel card also gives you the flexibility of transferring to a single or multiple bank accounts.   

Who can benefit from freight bill factoring? 

At times, companies must wait a while for brokers and shippers to pay. Meanwhile, those companies also need to pay for drivers, fuel, repairs, and other expenses as they wait. Freight factoring services are an ideal solution. It’s a convenient, flexible option for trucking companies of all sizes. However, factoring is especially beneficial for startup companies that lack large cash reserves.  

Whether you need to cover payroll, hire new drivers, or expand your fleet of trucks, payments from freight bill factoring are ideal. Also, if you need to improve your business credit, factoring is a great way to do so. You can quickly get paid for jobs, allowing you to pay off loans and pay your bills on time. 

In addition, if you want to focus on your business and take on additional projects, you should consider factoring. Triumph offers free back office support and collections, so you can turn your attention to booking loads and hauling freight. 

What are some of the benefits of factoring? 

  • The invoice factoring process may be cheaper than traditional loan interest rates. Furthermore, while a cash advance loan may be convenient for your business in the short term, it may not solve your working capital needs over time or grow with you as your business grows.  
  • There are options for every company’s requirements. There are invoice factoring agreements that have no-minimums, which means you can factor as little or as much as you want.  
  • You qualify for factoring based on your customers’ credit, not your own. This means that even if you don’t qualify for a loan, you may still qualify for invoice factoring. 
  • Some companies (like Triumph Business Capital) don’t require long-term contracts; you can factor on a month-to-month basis. But if factoring works for your business, you’re able to continue with it.  
  • You get a team of back office professionals who will support your trucking company with its invoices, help run credit checks on brokers and collect payments.  

How do I qualify for freight bill factoring? 

Whether you own a small or large fleet, your trucking business can qualify for invoice factoring. The qualification process is mostly about your customers; if their credit is strong, you’ll likely qualify. 

For more information regarding freight factoring services, contact Triumph’s experienced team of professionals. We’re a preferred partner, and a proud member of the International Factoring Association. We always make sure carriers receive payment on time, and we’ll positively maintain your relationships with your customers. Give us a call today!

freight factoring

Freight Factoring 101: How Does Freight Factoring Work?

Owning and managing a freight company isn’t easy. In the course of the day, you may wear many different hats: owner, manager, accountant, marketer, and human resources manager, to name a few. And when you’re juggling so many things, it’s easy to let something important slip through the cracks.

That’s where freight factoring comes in. It’s a financial service that helps streamline cash flow, leaving you free to handle other aspects of your business. But how does freight factoring work? Is it right for your company? Here’s what you need to know.

How Freight Factoring Works

Freight factoring, which is also sometimes called transportation factoring or trucking factoring, may be able to help you get a handle on your business finances and credit. Here’s a quick overview of how freight factoring works.

  1. You submit a factoring application. Once approved, we will issue a factoring agreement that lays out the specifics of your factoring contract, including your fees.
  2. We determine the creditworthiness of your customers and approve those that we will factor.
  3. You send us invoices to be factored. We advance you a percentage of the invoice’s value and work with your client to collect the amount owed.
  4. Your dedicated account executive will make collection calls as needed to collect your outstanding invoices.
  5. When the invoice is paid, we deduct our factoring fee, and return any reserves back to you.

The trucking factoring process is very simple. It’s designed to streamline cash flow for transportation companies, allowing them to pay their expenses and grow their businesses.

Are Back Office Solutions Part of Transportation Factoring?

One of the things that you may not know about freight factoring is that factoring companies offer additional back office services. It’s not just a cash advance product. For example, at Triumph Business Capital, we offer:

  1. Credit checks (including online credit checks)
  2. Invoicing and collections services
  3. Online reporting
  4. Data storage
  5. Fuel discounts
  6. Fuel advances
  7. Free trial to DAT load boards

We have worked with over 20,000 carriers, freight brokers and shippers. We understand the specific challenges associated with operating a trucking company, and we’re here to help.

Is Freight Factoring Right for Your Company?

We work with potential clients to see if freight factoring is right for them. When deciding if freight factoring is right for your business, you should start by asking yourself these questions:

  1. Do my customers take a long time to pay me?
  2. Is a lack of cash flow negatively impacting my ability to grow my business?
  3. Are slow paying customers impacting my ability to pay my vendors on time?
  4. Do I have issues related to my customers’ creditworthiness?
  5. Do I know the broker/shipper will pay me before I take a load?
  6. Am I spending valuable time making collection calls?

If you answered ‘yes’ to any of these questions, then there’s a good chance that factoring some or all of your invoices can help. Your time is valuable. By taking advantage of what factoring can offer in terms of cash flow and back office services, you can spend more time servicing your customers and expanding your business.

Conclusion

Factoring for the transportation industry is a specialized service that is designed to help owner-operators like you maximize their cash flow, reduce delinquencies and grow their businesses. To learn about our factoring services for transportation companies, contact us today for a free assessment.

invoice factoring

New to Invoice Factoring? Avoid These Common Mistakes

It’s been estimated that if all invoices were paid on time, U.S. small businesses could collectively hire 2.1 million more employees, which would reduce unemployment by 27 percent. That’s just one reason why more and more businesses are working with invoice and freight bill factoring services. But before you decide whether this service is right for your financial needs, it’s important to understand the process to avoid making some common mistakes.

Not reading over your invoice factoring services contract thoroughly. 

This is a mistake that can lead to discrepancies and overall dissatisfaction. But as is the case with any number of financial services, everything you need to know is clearly laid out in the contract — you just need to take the time to read every word. Otherwise, don’t be surprised if you incur additional fees or other consequences you weren’t aware of. Read every word and have a clear understanding of your contract before making it official with your signature.

Not being upfront with your clients about working with a factoring company

Most clients will have no problem working with a business that uses invoice and freight bill factoring services. After all, it shouldn’t affect any part of the quality of service they receive. You don’t want to keep them in the dark, especially because a factoring company representative will be contacting them about invoices and collections. Simply let them know that a third party will be handling your invoices and collections processes moving forward. You may even be able to provide better and faster service to your clients because you’ve outsourced these time-consuming tasks to another company.

Not considering invoice factoring as a solution to your cash flow problems

Small businesses (defined as businesses with fewer than 500 employees) account for 99.7% of all business in the United States. If your business is one of them, and you frequently have trouble getting your clients to pay their invoices on time, invoice factoring should be among the services you consider.

According to a U.S. Bank study, 82% of businesses that fail do so because of cash flow problems, and invoice factoring is one of the most efficient ways to get immediate and ongoing cash flow for your business without incurring debt.

Ultimately, avoiding these mistakes is the best way to optimize your business’s finances and cash flow. For more information about business invoice factoring, contact Triumph Business Capital.

invoice factoring myths

Don’t Fall for These Myths About Business Invoice Factoring

There are nearly 28 million small businesses in the U.S., and in today’s uncertain economic climate, many small businesses struggle to stay afloat as a result of insufficient funds. In fact, according to a U.S. Bank study, 82 percent of businesses that fail do so because of cash flow problems.

For many small businesses, however, invoice factoring can be a viable solution to their cash flow issues. Invoice factoring is a type of accounts receivable financing that converts outstanding invoices into immediate cash for your small business. Before choosing the right invoice factoring service for your business, it’s important to understand the facts. It’s also important to clear up the potential misconceptions about invoice factoring. Here are just a few invoice factoring myths you shouldn’t believe.

Myth 1: Business factoring services are expensive.

The most common misconception about invoice factoring services is – no surprise – related to the cost. Most charge a small percentage of the invoice total to provide your business with the immediate cash flow it needs to help meet your day-to-day expenses.

The reality is that no business can survive for long without a consistent stream of income.

Recent research suggests that nearly 60 percent of all invoices are paid late. Invoice factoring ensures that you’re not waiting for your money or wasting your time chasing down slow-paying clients.

Invoice factoring companies also provide additional services as part of your fee. These services – invoice creation and submission, collections, credit checks on your future clients — can be invaluable resources to busy small business owners who are wearing too many hats. Invoice factoring companies provide a team of back office professionals that keep your paperwork in check and make sure that you’re getting funded on the work you’ve completed.

When considering working capital solutions for your business’s cash flow issues, it’s important to keep in mind the additional benefits included in the factoring services and calculate the overall benefit to your business. Outsourcing your invoicing and collections processes can lead to savings in time and money, allowing you to dedicate more resources to growing your business.

Of course, the exact fee and costs associated with factoring depends on your specific business situation.

Myth 2: My customers will look negatively upon invoice factoring.

Some people think that businesses using invoice factoring might be having financial issues or may not be seen as dependable vendors. More than that, some business owners worry that a third party provider contacting your clients to follow up on payment may be seen as more of a collections service rather than an extension of your accounts receivable department.

But the reality is that thousands and thousands of businesses use this form of accounts receivable financing for their small business funding. Increasingly, invoice factoring is becoming more common across industries, as companies look to streamline their account receivables process.

Some providers can even provide a white label service in order to make it appear as though invoices are sent to and from your business instead of a third party.

Myth 3: Invoice factoring companies won’t work with businesses that aren’t ‘established.’

Whether you just started a company, or you’ve been in business for a long time, if you have an invoice, you can take advantage of business factoring services.

The reality is that most startups don’t have enough credit to qualify for traditional loans and financing. Conversely, invoice factoring looks at the credit history of your clients when deciding to purchase your outstanding invoices.

Finally, it’s important to note that all types of small- and medium-sized businesses can take advantage of invoice factoring services. Also, invoice factoring companies consider a wide range of criteria when reviewing your application and accounts receivables.

The best way to know if factoring is a great short- or long-term fit for your business is to be as straightforward and direct about your financial history and situation as possible.

Myth 4: All invoice factoring companies are the same.

It’s easy to assume that all invoice factoring companies offer the same services, charge the same rates and have the same contract terms. But in selecting a factoring company, it’s important to remember that there can be significant differences among providers.

For instance, depending on your agreement, many factoring companies require you to submit all of your invoices for funding and maintain monthly minimums (or be charged a fee). Not all factoring companies have these policies, so it’s important to ask and to read and then reread your contract to understand what you’re agreeing to and for how long.

Ultimately, it’s important to understand the facts about the services provided by an invoice factoring provider and the services that they provide before you decide on a working capital solution. If you’re ready to move forward or have questions about invoice factoring, contact Triumph Business Capital today for a free rate quote.

 

 

Increase Cash Flow

3 Quick Ways to Increase Cash Flow

Cash is king. You know this as well as anyone else. Without cash, you can find yourself in some pretty uncomfortable situations, like not having enough money for payroll, or making late payments to vendors and bill collectors.

So what can you do to manage your cash flow effectively? Let’s take a look at three quick and easy ways to increase your cash flow—and help you sleep at night.

1. Sell or lease unused assets

You paid good money for your assets and, even if you’re no longer using some of them, it’s time to put that investment to work again. Take an inventory of the assets you’re not currently using and consider selling or leasing them.

How do you shed the assets? Use your industry contacts, such as suppliers, to find buyers or lessees. Also search for websites that specialize in auctions for your industry. For assets with significant value, contact a business broker.

2. Deposit additional cash into interest-earning accounts

This one’s a bit of a no-brainer. Let the banks work for you for a change. Deposit any cash you won’t need for a while into an interest-bearing account so it can grow. Look for an insured account with the highest interest your financial institution offers and let your money sit there.

Here’s a tip: If you’re concerned about locking your funds away in a long-term account like a certificate of deposit, consider a money market account instead. Money market accounts offer greater interest than regular savings accounts, while still giving you access to your funds. After all, cash flow is what you’re after—not more restrictions.

3. Factor your receivables

Invoice factoring is perhaps one of the smartest cash flow solutions out there. In fact, this is how many other small to mid-size businesses manage cash flow effectively.

You may be asking yourself: How does invoice factoring work? Here’s how. Simply send your invoices to a factoring company like Triumph Business Capital and we’ll fund the money straight to your bank account—usually within 24 hours.

Keep in mind that we verify the creditworthiness of your customer. If the customer has a history of missed or late payments, the invoice may not be approved for the financing.

Get paid today

We believe that getting paid shouldn’t be the hardest part of your job.

When you factor your invoices with Triumph, you’ll also gain access to a host of back office solutions. Solutions like free credit checks to make sure your clients have the ability to pay; and collection services to get your money from those who won’t pay.

Ready to get started? Factor your invoices with Triumph Business Capital and get paid today.

 

Invoice Factoring

Debt Collection vs. Invoice Factoring: What’s The Difference?

It’s not only been days, but weeks—or even months—since you performed work for your client, and you still haven’t received payment. Sound familiar?

As a professional, you need to be paid on time. You’ve got people to support and bills to pay. You may be considering using a debt collector to secure payment from your customer. Or, you may have considered proactively factoring your invoices with a trusted, credible factor. But which one is the smarter option. Are there any hidden implications you should be considering before making your decision?

The answer is yes. There’s actually a huge gap between debt collection and invoice factoring. Think through these three key differences before reaching out to either one.

1. Purpose

The primary purpose behind using a debt collector is very different from the reason you’d use invoice factoring. While invoice factoring involves current unpaid invoices—no more than 30 days old—debt collection deals with invoices that are at least 60 days past due.

Debt collection

If you’re still trying to get paid months after you’ve completed the work, it might be time to check in with a debt collection agency.

Invoice factoring

If you prefer timely payment for your work instead of relegating your receivables to the bad debt file, you’ll want to connect with a reputable invoice factoring company like Triumph Business Capital.

One of the benefits of working with an established and reputable factor like Triumph is that we’ll not only factor your invoices; we’ll also provide a host of back office solutions—including payment services—to ensure that you get paid on time for the work you perform. Welcome to the best of both worlds.

2. Funding timeline

How much longer are you willing to wait to be paid? The difference between how long it takes a debt collector to get funds to you and how quickly an invoice factoring company sends you funds can be a game changer.

Debt collection

You’ll be paid, but only after the collection agency receives payment from your customer. That can take time—if it happens at all. Add an aggressive process that can alienate customers, and you may decide that engaging a debt collection agency just isn’t worth it.

Invoice factoring

With factoring, you simply sell your invoices at a small discount and get immediate cash for your business. How fast? You get paid before the factoring company receives any money from your customer—usually within 24 hours.

3. Fees

How much are you willing to pay to be paid? In an ideal world, the payment conflict wouldn’t exist. But in today’s environment, unfortunately, you often end up either arm wrestling your customers or throwing up your hands.

Debt collection

When you hire a debt collector, you’ll likely pay a hefty 25% to 30% collection fee—which still beats giving up 100% of an unpaid invoice! But there’s an even better option.

Invoice factoring

Getting paid shouldn’t be the hardest part of your job. Invoice factoring isn’t free, but weigh its small price against its great advantages: you’ll receive an immediate payment from the factor—usually 70% to 100% of the invoice—followed by any remaining balance (minus a fee) as soon as the factor collects full payment from your customer.

Get paid today

Factor your invoices with Triumph Business Capital to get paid today.

When you factor your invoices with our team, you’ll also get access to a host of back office services like credit checks to make sure your clients can pay, and collection services to get your money from those who won’t.

Ready to get started? Factor your invoices with Triumph Business Capital today.

Invoice Factoring Service

Get Paid On Time While Maintaining Business Relationships

Let’s face it, money can get in the way of any relationship, whether business or personal. And small or mid-size business owners like you never want to compromise relationships with customers or vendors.

But without the funds to pay your bills on time, how can you avoid damaging your relationship with your vendors? And how can you demand timely payment of your invoices without jeopardizing your relationship with your customers? What’s a small to mid-size business owner to do?

Managing cash flow takes diplomacy—and these three industry secrets.

1. Set up mutually beneficial payment terms

If, for example, a customer refuses to pay an initial deposit, but wants you to work on a large project that won’t be completed for months, you can negotiate progress payments. As you reach the agreed-upon benchmarks, you’ll receive partial payments, at least enough to cover your overhead and project costs. This will keep your contractors and vendors happy.

Your customer will benefit, too, by making smaller periodic payments instead of paying a huge lump sum upon completion, or even a hefty deposit with a large final payment.  

2. Pay your bills on time

Another key point is to pay your bills on time—always. Set up automatic payments so you never miss a bill payment. Timely payments go a long way toward improving your credit and your credibility. Vendors and contractors appreciate on-time payments and may even give your account preference over other businesses.

On the other hand, late payments can be a black mark against your business—vendors may not be as willing to work with you, and may stop extending credit or services.

3. Offer discounts for quick payment

Everyone likes to save money! Offer a discount off the top of your invoices if your customers pay within a specified period instead of waiting 30, 60, or 90 days to submit payment. Many will jump at this chance, and your offer will generate good will with them. It’s a win-win for everyone.

Get paid, today

Still struggling to get paid by your customers so you can pay your vendors? Invoice factoring can be an easy and effective way to manage cash flow while maintaining—and even improving—business relationships.

Simply send your invoices to a reputable factor like Triumph Business Capital so you can get paid today. When you factor your invoices with Triumph, you’ll get 70% to 100% of your funds upfront. And as we collect full payment from your customers, we’ll then pay you the remaining balance on your invoices, minus a small fee. In the end, you’ll get the cash you need to pay vendors and creditors quickly.

Since 2004, Triumph Business Capital has helped thousands of small and mid-size businesses manage their cash flow effectively. When you factor your invoices with our team, you’ll also get access to a host of back office services like credit checks and collections: We’ll make sure your customers can pay you, and we’ll get your money from those who won’t.

Ready to get started? Factor your invoices with Triumph Business Capital today.

About Invoice Factoring

Cash Flow Gaps? Boost Your Bottom Line with Invoice Factoring

You’re running a small or mid-size business and that takes money—lots of it. But coming up with the capital you need, when you need it, can often pose significant challenges—like how to meet payroll, pay vendors, upgrade equipment . . . the list goes on and on.

So how do you manage cash flow effectively? Let’s explore some common business cash flow problems and what you can do to turn those problems into productivity and profit.

4 common small business cash flow problems

1. Meeting payroll demands

As a small business owner, you know that payroll can take a large chunk of your budget each and every month, if not every week. At best, many small business owners lose sleep over payroll; at worst, some lose their business entirely.

Bankruptcies in the U.S. increased to 25,227 companies in the second quarter of 2016, from 24,797 companies in the first quarter of 2016. That’s a staggering number of businesses that closed shop in just this year alone.

Perhaps you can still keep your doors open, but just by a crack. You’re struggling every payday to meet the financial demand. You’re bound by the Fair Labor Standards Act (FLSA)—laws that set the minimum wage and establish guidelines regarding overtime—as well as state payday laws outlining when employees must be paid. No matter how much you want to treat your employees fairly, if you can’t meet those requirements, you could be in for it.

An employee who has a payroll grievance, whether about regular pay, overtime, or vacation pay, can submit a complaint against your company to the appropriate state or federal agency.

The result? An investigation by the agency, which may, in turn, lead to financial penalties, the loss of your business license, or a lawsuit against your company. Your business could be liable for back pay, fines, or other financial judgments—not to mention the collateral costs and work disruption associated with such investigations.

2. Maintaining a flawless credit score

Since your credit score plays a key role in the viability of your business, it’s important to keep a watchful eye on this number. At the very least, get a free credit report each year and make sure the information is both correct and current. You can request removal of any negative information after seven years, but don’t forget that you’ll have to wait up to 10 years for a bankruptcy to drop off your report.

If your credit score is less than a perfect, get back on track with these simple steps.

  • Pay your bills on time—always. Arrange automatic payments on every debt so you never miss a payment. Timely payments determine up to 35% of your score.
  • Keep open all accounts that are in good standing. These older accounts positively influence your length of credit history—about 15% of your score.
  • Apply for a credit card—but read the fine print for interest and fee information. Most importantly, only use the card for small charges you can afford to pay back every month.
  • Keep a low debt load—carrying more than 25% of your limit will increase your debt-to-income ratio and damage your score. Pay the bill on time and in full each month.
  • Don’t apply for more credit accounts than you need. If you must open new lines of credit, don’t try to open them all at once. Prospective lenders will check your credit, which lowers your score, and these pings stay on your record for two years, accounting for 10% of your score.
  • If you have a dispute about a debt, be proactive to communicate with the lender.  If all else fails, take the issue to small claims court before the debt gets into collections. Avoid lawsuits and judgments, too.
  • Review your credit report often, disputing incorrect information. You can get one free report each year, but monitoring its accuracy more often may be worth the cost as you’re rebuilding your credit.

3. Surviving slow-paying customers

You know the drill—you deliver your end of the bargain; you invoice; and then you wait . . . and wait . . . and wait to be paid. All the while, you have overhead costs to cover, vendors clamoring for their money, and employees who need to be paid on time.

Maybe your payment terms are net 15, but your customers insist on their terms—net 30, 60, or even 120. You don’t want to lose their business so you reluctantly agree. Fair? Not at all. And, as you well know, waiting to get paid can have serious financial consequences, like not having enough money to run your day-to-day operations, much less expand your business.

You could, of course, apply for a line of credit or get a loan to help carry you through the month, but will you get approved? And with the piles of paperwork and myriad backup documents required—not to mention the back and forth with the bank—you could be practically out of business before the bank makes a decision, much less actually gives you the funds your business needs. And let’s face it: you simply cannot afford to wait all that time only to be turned down.

4. Avoiding unnecessary debt

“Debt” is a nasty four-letter word to a small or mid-size business. According to the U.S. Small Business Administration (SBA), roughly 50 percent of small businesses fail within their first five years, mostly because of insufficient capital, poor credit arrangements, and—you guessed it—too much debt.

Unfortunately, debt can be accumulated rather quickly when trying to boost cash flow or finance growth. Perhaps a business loan could help, but loans must be repaid—and with interest, which can add up significantly.

Fact is, unnecessary or additional debt can be the first step on the slippery slope toward Chapter 11 bankruptcy or even “Closed!”

Fortunately, you can utilize financing solutions other than bank loans—options such as invoice factoring—that won’t incur that four-letter “D” word or burden your business with additional cash flow hardship.

How to overcome cash flow gaps

With potential hazards lurking around every financial corner, how can a small or mid-sized business overcome cash flow gaps and boost its bottom line in this economy—or any economy?

Alternative lending

You could opt for cash flow solutions like alternative lending, but that can prove costly. If your loan is a payday loan, your payment will be withdrawn from your checking account every single day. If the money isn’t in your checking account, you’ll accrue additional fees, increasing the payoff amount and delaying the payoff date—damaging your bottom line by keeping your business in debt and paying exorbitant interest longer than expected.

Merchant cash advance

You could also consider a Merchant Cash Advance, which charges you based on your projected sales. But this, too, can be costly—and risky. If your future sales don’t meet your projections, you could end up repaying more than you actually sell, and at a high interest rate. While invoice factoring offers a genuine cash flow solution by purchasing your existing invoices, a merchant cash advance can actually add to your stress.

Invoice factoring

Invoice factoring answers each of these financial challenges. Here’s how it works.

You simply sell your invoices, minus a small discount, to a factoring company like Triumph Business Capital. After checking out the creditworthiness of your invoiced customer, the factor advances 70% to 100% of the invoice amount to you as immediate cash for your business.

In a recourse factoring agreement, you’re likely to see 100% advanced, while a transportation company with a non-recourse factoring agreement would likely see a 90% to 97% advanced, and a small business with a general factoring agreement would likely see 70% to 95% advanced. And when you customer pays the invoice, the factor remits the balance, minus a fee, to your business.

So instead of waiting 30 to 120 days—or even longer—to receive your customer’s payment, you get cash in hand within 24 to 48 hours.

Triumph offers both recourse and non-recourse invoice factoring for approved clients. With non-recourse factoring, you’re not liable if your customer doesn’t pay your invoice for credit reasons. Since the factor assumes all risk with non-recourse invoice factoring, your business reduces bad debt while increasing cash flow, even if your customer never pays the invoice.

Here’s why invoice factoring might be right for your business.

Get more cash for immediate needs

Invoice factoring helps relieve payroll pain, giving you ready cash to meet weekly, bi-weekly, or monthly payroll. Need to stock up on supplies? No more waiting for your customers’ payments so you can purchase supplies or pay vendors. How about the rent or mortgage payment? Invoice factoring can take the stress out of meeting all your first-of-the-month commitments.

Get more cash for growth opportunities

With invoice factoring, you can expand operations, hire more staff, or develop a new product line. Your customers’ unpaid invoices no longer hold your business hostage, stifling your progress. And unlike a conventional loan, there’s no limit to the amount of financing with Triumph. The cash you receive for your invoices is unrestricted—you don’t need Triumph’s approval to use it for whatever your business needs.

Get more cash without more debt

Sure, bank loans or lines of credit could shore up your finances. But would your business be approved? How long would that take? And at what cost? Invoice factoring gives your business the cash you need quickly and easily. It doesn’t show up on your balance sheet as debt and your business won’t have to make onerous interest payments. Invoice factoring doesn’t negatively impact your credit score either.

Let Triumph help you boost your bottom line today

We believe that getting paid shouldn’t be the hardest part about your job. Since 2004, Triumph Business Capital has helped over 7,000 small and mid-size businesses in the U.S. manage their cash flow.

As your partner, we’ll factor your invoices so you can get paid today—and make your financial challenges a thing of the past. And in addition to helping you manage cash flow through invoice factoring, we offer a host of other business services through our parent company Triumph Bancorp to help you do what you do best.

Asset-based lending

Does your business need $1 million or more? Triumph Commercial Finance Business Capital offers asset-based lending (ABL) solutions for small and mid-size businesses. As your company steps up to this next level, Triumph Commercial Finance may be your best option for continued growth.

Defined as a loan or line of credit secured by balance-sheet assets (“collateral”) such as accounts receivable, inventory, etc., ABL typically costs less than invoice factoring. However, its loan underwriting process also has more requirements, including CPA-reviewed or -audited financial statements that reflect favorable earnings and tangible net worth. Additionally, ABL can be more restrictive than invoice factoring.

Equipment financing

Triumph Commercial Finance also specializes in equipment financing for the construction, refuse, and transportation industries—so you can upgrade your operations to grow your business or expand your footprint. Loans for purchasing new or used equipment range from $250,000 to $6 million, and loan terms are typically two to five years.

Back office solutions

Invoice factoring at Triumph Business Capital includes a slew of helpful back office solutions like free credit checks, collection services, data storage, and more. It’s our goal to help you reduce overhead costs and simplify your operations.

Take the guesswork out of taking on new clients. Triumph Business Capital offers free credit checks to help you make informed decisions before signing a new contract. And our online portal gives our trucking clients access to freight broker credits that we monitor daily.

After you’ve provided the contracted goods or services, our Account Resolution team will ensure that you receive timely payment. What’s more, Triumph Business Capital provides account management reports online—conveniently available to review at any time—so you can make smart business decisions based on your actual data (ageing reports, collection reports, etc.).

Insurance services

Need insurance at competitive rates? Triumph Insurance Group Business Capital offers a wide range of insurance options for the transportation industry, as well as damage protection for new and used equipment. Get the property and casualty insurance coverage that’s right for you—and at the best price, with affordable payment options.

 


Let’s get you paid today

Triumph Business Capital is committed to helping small and mid-size businesses manage cash flow and so much more. End late payment worries and slow cash flow problems. Factor your invoices and get paid today with Triumph Business Capital.

Small Business Factoring

How Much Does Invoice Factoring Cost?

Don’t you love that feeling—you know, the one you get when an invoice pays? With invoice factoring, you don’t even have to think about processing invoices, and you can forget about having to wait 30, 60, or 90 days to receive your client’s payment. You can actually get paid today. When calculating the cost of invoice factoring, it’s important to remember the benefits it can provide to small businesses and to always consider your own business situation and goals. 

The many benefits of invoice factoring

No more invoices to process, no waiting for clients to pay, and immediate cash in hand—invoice factoring services simplifies your bookkeeping experience and helps you get paid on time every time.

According to the Wall Street Journal, “The factor advances most of the invoice amount—usually 70% to 90%—after checking out the credit-worthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction (or factoring) fee.”

The benefits of invoice factoring are many, but how much does it actually cost? In this article, we’ll explain everything you always wanted to know about invoice factoring.

Non-recourse factoring vs. recourse factoring

With non-recourse factoring, the factor assumes the risk of collecting the debt. That’s a lower-risk option for small companies that can’t absorb the cost of unpaid invoices, but it does cost slightly more than recourse factoring.

Larger corporations often favor recourse factoring because, if a customer fails to pay, they can afford to return the funds they received from selling the uncollectible invoice to the factoring company.

Aside from the cost differential between the two, there are times when the cost differential is not justified by the credit risk being taken.

For example, if you’re selling to WalMart or the Federal Government, the chances of either one not paying because of credit reasons are quite small. Thus, paying a premium for non-recourse starts to look a little less attractive. If you do elect for non-recourse factoring, pay special attention to the Security Agreement that you’ll be required to sign and make sure you ask the factor to specifically go over when you will be covered and when you will not be covered from credit risk.

So how much does invoice factoring cost? 

Fees vary from factor to factor, so check with your factor before getting started.

Application/Due Diligence Fee

Some factors charge this fee some do not. Those that do not may recover this upfront expense by increasing the initial financing fees. This fee varies highly from factor to factor and can cost anywhere from zero to thousands of dollars.

Closing Fee

The factor retains a percentage of each invoice, typically 1–3%.

Monthly and Termination Fees

Some factors may require that you sell a certain amount of your invoice each month and sign a long-term contract. If the monthly target isn’t met, a minimum monthly fee will be charged. Terminating the contract early can trigger a cancellation fee.

Discount Fee

The cost of paying for your invoices in advance can vary anywhere from 1.5–5% of the invoice value each month. This wide disparity is yet another reason to check with your factor before jumping into a relationship.

Factoring Fee

If your invoices go beyond the 30–45 days covered by the advance discount fee, you can expect an additional charge of 2–3% or more for every 30 days that the receivable is outstanding beyond the original 30 days. Some factors may prorate the fee daily, while others may charge on a 10-day basis.

Triumph’s factoring fee depends on your unique factoring agreement. Our factoring experts considering whether you’ve chosen recourse or non-recourse factoring, the credit quality of your customers, and more. But in general, let’s say you decided to factor $3,000 with a 95% advance rate over a 90-day repurchase period. Meaning, you’d get paid $2,850 within 24 hours of submitting a load, and the final 5%—minus standard factoring fees—after 90 days. 

While the scenario we just presented is common, it’s important to remember that your factoring fee will vary depending on the terms of your factoring agreement.

How does Triumph Business Capital compare to other factoring companies?

Now that we’ve broken down the fees, let’s get into specifics. While not all factors are entirely transparent with their pricing, we’re an open book. The last thing we want to do is surprise you with a fee. Here’s how our pricing structure compares to other popular factors you may have heard of.

Other companies charge flat advance rates of 10–15% and $15 per wire, but offers free ACH transactions. Some don’t include a setup fee, but they charge a fee based on the advanced amount.

Triumph Business Capital, on the other hand, works with your business to fit your budget and requirements. Triumph takes into consideration the credit risk associated with your customers, the time it takes them to pay their invoices, and the monthly funding volume we forecast for your business.

Can invoice factoring save you money?

Consider this simple illustration. You decide that invoice factoring is the best option for your business, so you convert your invoices into cash instead of waiting a month or more to get paid.

With immediate cash in hand, you can stop worrying about how you’re going to pay your bills and get on with the growing your business. And when you pay vendors more quickly, you can take advantage of their discount offers, which saves you money. You’ve not only gotten invoice collection off your plate, you’ve paid your bills and saved money in the process—and that’s good business.

Calculate The Cost To You...

Let's take a look. Pricing for both options will vary considerably based on business size and other criteria - so feel free to enter the information most appropriate to you.

Cash Advance Loan
$97,000
125
$1,000
$125,000
109%
Invoice Factoring
$114,000
21%
Your Effective Annual Interest Rate
Cash Advance Loans
109%
Invoice Factoring
21%

Cash Available For Operations
DISCLAIMER

The above calculations incorporate estimated values and are intended for comparative illustration purposes only. Terms and conditions of specific cash advance loan and/or factoring agreements may result in additional margin of error. If, for any reason, you suspect the results are not representative - please contact us directly so that we may address those concerns. Alternatively, the most accurate way to calculate the Annual Percentage Rate for a loan or competitive factoring facility may be to contact the financial service provider directly and request that they perform or confirm the calculations. Thank you.

Get paid today

The hardest part about your job shouldn’t be getting paid. Let Triumph Business Capital help you factor your invoices and get paid today.

 

Let’s Talk About How to Get You Paid

Take five minutes to learn more about how we help owner/operators increasing their cash flow.

Invoice Factoring Companies

Invoice Factoring vs. Traditional Bank Loan: What’s The Difference?

Invoice factoring and a bank loan have very little in common—other than the fact that both provide cash to small businesses. Here’s a simple factoring vs. bank loan comparison to help you decide which can work for your business.

Invoice factoring

With invoice factoring, you simply convert your invoices into immediate cash to cover operating costs without taking on debt. You sell your invoices at a small discount to a factoring company like Triumph Business Capital and get immediate cash for your business.

Worried about your credit? No problem! Invoice factoring is primarily based on the quality of your customers’ credit, not your own credit or business history. While most banking institutions look at the same documentation we do, our focus primarily on the quality of your customers. Don’t let the successes and failures of your business journey stop you from getting paid.

Plus, invoice factoring works fast. You’ll typically receive approval in a few business days. Better yet, there’s no debt to repay, and you have unlimited funding potential.

As long as you have invoices, you have the opportunity to convert them into cash. Even startups are eligible for factoring.

Traditional bank loan

Compare that to a bank loan. You pay principal and interest over time, and the funding potential is capped by the bank. After completing all necessary paperwork, the approval process can take months—and it’s based on your company’s operational and credit history. If you’re a startup, chances are you won’t be approved for bank funding.

Additionally, bank loans and lines of credit often carry what’s called a loan covenant. Essentially they’re conditions in a commercial loan that require you to fulfill certain financial performance requirements. If you don’t meet the covenant requirements, you can default on your loan or line of credit. If your bank representative is nice, they may waive the default and charge an additional waiver fee. In the end, it’ll likely cost you more than you bargained for.

 

Bank loans or lines of credit also come with restrictions that forbid you from taking certain actions like purchasing or selling assets for your business, incurring additional debt for any reason, and more. Because of restrictions, you’ll often find yourself with the financial resources you need without the freedom to use them to solve your biggest business problems.

 

While a “line of credit” implies that you’ll be financed for whatever you need up to a certain amount, more often than not, that’s not actually what happens. Your credit line often comes with so many restrictions that it’s often easier to look for the next best option.

 

Which is best for your business?

If you own a business that has a long history of favorable cash flow and profits, or is well-capitalized, then a bank line of credit might be the right choice. But if you’re a new business—or one that may have had a significant hiccup somewhere along the road—then you should consider invoice factoring.

Invoice factoring gives you immediate cash flow without creating debt on your balance sheet, and it’s virtually an unlimited source of working capital.

While banks require a wide range of collateral and financial statements, often refusing businesses that need additional funding but can’t meet the stringent borrowing requirements to qualify for a new bank loan.

Why Triumph Business Capital?

When considering factoring, it’s important to work with a reputable factor with a strong track record. Triumph Business Capital has provided factoring for over 7,000 small to mid-sized businesses since 2004. We have a long history with the transportation industry—and staffing agencies, government contractors, and small businesses are increasingly seeking us out to help solve their cash flow challenges. Triumph also offers smart Asset Based Lending and Equipment Financing options as well as a discount fuel card program.

Triumph is a proud member of the International Factoring Association (IFA) and strictly adheres to the IFA’s code of ethics. Originally called Advance Business Capital, the company joined Triumph Bancorp Group in 2012. As a financial holding company, Triumph Bancorp, Inc. maintains a diversified line of community banking, commercial finance, and asset management activities. Since day one, our vision has been centered on four core business priorities—delivering value, developing people, demonstrating expertise, and displaying a commitment to enterprise success.

Factor your invoices today

Ready to get started? Let Triumph Business Capital help you factor your invoices—and get you the cash you need when you need it.

Accounts Receivable Financing

4 Funding Options for Your Small Business in 2018

What are some of the popular types of short-term funding available to small businesses? How can you fund your business? You’ve got questions; we’ve got answers!

 

1. Bootstrapping

Bootstrapping is a funny word for a smart financial concept. The term comes from the phrase “pulling oneself up by one’s bootstraps.” An individual is said to be bootstrapping when he attempts to found and build a company from personal finances or from the operating revenues of the new company. According to Investopedia, more than 80% of new startup operations receive their funding from the founder’s personal finances.

 

So where exactly does the bootstrapper get startup funds? A bootstrapper may pull from a savings account, use zero interest credit cards, or leverage personal assets like selling a house or car and cashing in on a 401(k). With bootstrapping, the business is your own—no answering to investors like venture capitalists.

What are the benefits and drawbacks of bootstrapping?

Business owners who utilize bootstrap funding don’t have to worry about diluting ownership between investors. They don’t need to issue equity, and they can focus debt on personal sources. The downside? Unnecessary financial risk is all on the entrepreneur. And bootstrapping may not provide enough investment for the company to become successful at a reasonable rate.

What other companies have used bootstrapping?

If you decide to bootstrap, however, you’ll be in good company. Dell Computers, FaceBook, Apple, The Clorox Company, and The Coca-Cola Company each catapulted to greatness from humble beginnings as a bootstrapped enterprise. To learn more about bootstrapping, Fast Company offers 10 tips for bootstrapping your startup.

 

2. Friends and family

Of course, you can always tap into friends and family. With business plan in hand, pitch your idea to those closest to you, explaining what you’re selling, what you plan to charge, and how they’ll make money by backing your business.

What are the benefits and drawbacks of tapping into this method?

Be upfront about the risks and put the rules behind the investment in writing. Whether you’re asking for a loan, an investment, or even a gift, remember that each one comes with strings attached.  In the case of loans and investments, you will have to pay the money back: you cannot file bankruptcy if the business fails.

 

Entrepreneur.com offers tips and tactics in Five Tips for Asking Friends and Family for Funding.

 

3. Loan or Line of Credit

You can also apply for a loan or line of credit. What’s the difference? A loan is a specific amount disbursed to you at once in a lump sum. It has a fixed or variable interest rate, and a fixed repayment term. On the other hand, a line of credit functions much like a credit card. You’re given a maximum amount that you can use over a period of time, and you can borrow against that amount as you need money.

What are the benefits and drawbacks?

Once you’re approved for a line of credit, you can tap into it at any time to access the amount your business needs. You can also use a line of credit as an alternate overdraft protection option on a checking account. Keep in mind, though, that excessive borrowing against a line of credit could get you into financial trouble as surely as continuing to rack up credit card debt.

 

Want to know more about the benefits and drawbacks of traditional bank loans? We just wrote an article to compare and contrast traditional bank loans and invoice factoring. Read the full article here.

 

4. Invoice Factoring

Invoice factoring can be a small business owner’s best friend. It’s been around for over 4,000 years, dating back to the time of King Hammurabi of Mesopotamia. In the 1900s, the most popular industries for invoice factoring were the garment and textile industries. Today, the transportation industry, staffing agencies, government contractors, and small businesses are taking full advantage of invoice factoring. The reason? It helps relieve the stress of cash flow and slow-paying clients without adding debt.

How does invoice factoring work?

Here’s how: you sell your invoices at a small discount to a factoring company like Triumph Business Capital and get immediate cash for your business. Since 2004, Triumph Business Capital has provided factoring services for 7,000 small to mid-sized businesses throughout the U.S.—so you can be sure you’re working with a reputable company that has your best interests in mind.

Are there any drawbacks?

Invoice factoring can have higher fees than traditional financing, with fees based on sales volume and factoring agreement. But it’s a small price to pay for welcome relief and cash in hand. Learn more about the Common Risks Involved with Invoice Factoring.

 

What are the best options for short-term business funding?

Triumph Business Capital offers more than just invoice factoring. If your business has grown to the next level and you’re looking for a larger loan to pay for new equipment or provide additional working capital, Triumph offers smart Asset Based Lending and Equipment Financing options as well as a discount fuel card program.

 

Let’s Talk About Your Cash Flow

Take five minutes to learn more about how we help owner/operators increasing their cash flow.

Accounts Receivable Financing

The Ultimate List of Funding Options Every Small-Business Owner Should Know About

It’s a big world out there. We’re talking the world of funding for small- to medium-sized businesses. That’s why we’re giving you a bird’s-eye view of the available options—everything you need to know about funding your business.

Invoice Factoring

You may have heard of it; maybe you know a company or two that use it. But what exactly is invoice factoring?

 

Invoice factoring can be a welcome relief for a small business or government contractor—or any business owner tired of waiting for their invoices to be paid. You simply sell your invoices at a small discount to a factoring company and get immediate cash for your business. According to the Wall Street Journal, “Now billions of dollars in accounts receivable flow through factors each year.”

 

Should you consider invoice factoring for your small business?

Here’s what you should know about invoice factoring before diving in. Invoice factoring virtually eliminates cash flow problems. There’s no need to process invoices and wait—and wait—to get paid by your clients. No more putting plans on hold because there’s just not enough money to put them into effect. Or worrying about meeting payroll because you haven’t been paid yet. Non-recourse factoring even reduces bad debt since the factor assumes all risk if the invoice isn’t paid.

 

Got bad credit? Bank loan application already declined? No worries. Invoice factoring companies look at your credit and business history differently than a bank would. They base the majority of their decision on the quality of your customers’ credit and business history, not your own. The downside? Invoice factoring can have higher fees than traditional financing, but it can be well worth it when you consider its many advantages, including being able to sleep at night.

 

Whom should you trust?

It’s important, of course, to work with a reputable factoring company like Triumph Business Capital. Since 2004, Triumph has provided factoring for over 7,000 small to mid-sized businesses like yours—from the transportation industry to staffing agencies, government contractors, and other small businesses.

 

If your business has grown to the next level and you’re looking for a larger loan to pay for new equipment or provide additional working capital, Triumph also offers smart Asset Based Lending, Equipment Financing, and a discount fuel card program.

 

SBA Loan

The U.S. Small Business Administration (SBA) can also help finance your business with a guaranteed loan issued through participating banks and other lenders.

 

The most popular type of SBA financing is a General Business Loan, otherwise known as a 7(a) Loan. You can use the funds to establish a new business or assist in the acquisition, operation, or expansion of an existing business. The SBA guarantees loans up to $5 million to help small business owners with major investments, like building new facilities or buying land, machinery, and equipment. The SBA also offers loans that help small business owners affected by natural disasters and other kinds of emergencies.

 

Should you consider an SBA loan for your small business?
If you don’t qualify for a traditional bank loan, the government can help—although you’ll still need to work primarily with a bank. Aside from a low annual percentage rate (APR), you’ll receive funding in less than a month. Also, you’ll have more time to repay an SBA loan. If you use the loan for working capital or daily operations, you’ll have seven years to pay it back. Buying new equipment? You’ll have up to 10 years. If you use the funds for a real estate purchase, the terms go up to 25 years. A longer loan term means a lower interest rate and lower regular payments.

 

The application process, however, can be daunting. An SBA loan requires good credit and may call for collateral—and the paperwork can be both lengthy and cumbersome. The best way to navigate the process is to work with a bank that has extensive experience with SBA loans. The advantage? Lenders offer flexible terms and low rates since the federal agency guarantees the loans.

 

Alternative Lending

You’ve probably seen advertisements for alternative lenders like Kabbage, OnDeck, Lending Club, Prosper, Street Shares, and Deal Struck. Even PayPal has become a major player in the alternative lending space.

 

Alternative lending is a saving grace for some small businesses—especially if they need cash fast, or if bad credit disqualifies them for traditional lending. Sometimes referred to as “direct lending,” alternative lending provides cash in hand within two to three days on average, with a 12- to 36-month repayment period. And there’s no restriction on how to use the money.

 

Merchant Cash Advance (MCA)

MCA is an alternative financing source that provides businesses with a lump sum of cash by purchasing a set amount of their future sales. MCA companies debit your business account on a daily basis until the loan is paid in full.

 

Sound like invoice factoring? Not quite. Merchant cash advances and invoice factoring are both alternatives to traditional financing. Each involves a simple, quick application process with minimum credit requirements, making it easier and faster for small businesses to get approval—but while merchant card advances may seem like an equal option to invoice factoring, there are several catches.

 

Primarily, if your receivables are inconsistent, you may not have enough cash in the bank everyday that a withdrawal is made. At that point, you’ll overdraft on your account and experience the fees and penalties that follow.

 

Should you consider merchant cash advance for your small business?

Merchant cash advancements typically involve more risk than invoice factoring. A merchant card advance charges you based on your projected sales, while invoice factoring companies purchase your existing invoices. Since merchant cash advance payments are solely based on a prediction, rather than an actual dollar amount, this means that if your future sales don’t meet your projections, you could end up making large payments, with a much higher interest rate—usually significantly more than invoice factoring.

 

The larger problem could be that the payments continue for a period beyond your revenue generation. This form of cash advance is typically associated with incredibly high interest rates and should be avoided if at all possible.

 

Should you consider an alternative lending source for your small business?

The process for applying for alternative lending is fast and often easy. The loan application can be completed entirely online and approved in just a few minutes. Approval rates for alternative lending are much higher (64 percent, as opposed to about 20 percent for big banks, according to Inc.), and you could have your money in a matter of days, rather than weeks or months. Typical lending ranges from $10,000 to $100,000.

 

But alternative lending can be costly. In fact, the cost of these loans can be significantly more than the annualized rates associated with conventional financing. If your loan is a payday loan, beware. Your payment will be withdrawn from your checking account every single day. If the money isn’t in your checking account, you’ll accrue additional fees, increasing the payoff amount and delaying the payoff date. Another thing to keep in mind—be sure you’re working with the lending company that actually provides the financing, versus dealing with a broker, which leads to substantially more costs.

 

Microloans

Heard of microfinancing? It’s the new buzzword in funding circles, yet its concept dates back over 200 years. The first case of microlending, attributed to the Irish Loan Fund system introduced by Jonathan Swift, sought to improve conditions for impoverished Irish citizens.

 

So what is microfinancing? According to Investopedia, “Microfinancing provides options to customers with limited resources to promote participation in productive activities or to support a small business.” Simply put, it’s a type of banking service for unemployed or low-income individuals or groups who have no other access to financial services. Some microlenders even provide information in the areas of financial literacy, such as understanding interest rates and managing financial risks. Several organizations, including the Small Business Administration, offer microloans to help emerging businesses and underserved individuals get solid financial footing to start and grow their businesses.

 

The SBA offers microloans of up to $50,000 with a maximum term of six years. Administered through community nonprofits, the loans can be used for working capital or for the purchase of inventory, supplies, furniture, fixtures, machinery, or equipment. You can’t use the funds to pay an existing debt or to buy real estate.

 

Here’s how SBA microloans work: The SBA makes funds available to specially designated intermediary lenders—nonprofit organizations with experience in lending and technical assistance—including Justine Petersen, Grameen America, and Access to Capital for Entrepreneurs, to name but a few. These intermediaries then make loans to eligible borrowers. But before these lenders consider an application, qualifying for SBA microloan financing may require borrowers to complete specific training or planning—requirements designed to help you launch or expand your business successfully.

 

Other independent organizations—such as Bentley Microfinance Group, Association for Enterprise Opportunity, Business Center for New Americans, and Opportunity Fund—also provide microloans to the underserved community outside of the SBA model.

Should you consider a microloan for your small business?

A microloan is easier to get than a traditional loan, especially if your credit report is less than perfect or you don’t have a long credit history. If you don’t have a credit score, you can opt for a credit-building loan that lets you establish credit. On the other hand, a microloan usually costs more than a traditional bank loan.

 

Additional Government Funding Options

The federal government isn’t the only agency that can help your small business get off the ground and grow. Every state and many local governments have economic development agencies dedicated to helping both new and established businesses to grow and succeed. These agencies offer such services as start-up advice; training and resources; financial assistance through loans, grants, and tax-exempt bonds; business location and site selection assistance; and employee recruitment and training assistance.

 

Some states also provide grants for expanding childcare centers, creating energy-efficient technology, and developing marketing campaigns for tourism. These grants usually require the recipient to match funds or combine the grant with other forms of financing, such as a loan. The amount of available grant money varies, depending on each grantor and the type of business to be funded.

 

In addition to loans, the SBA also offers grants to nonprofit and educational organizations in many of its counseling and training programs. However, the SBA does not provide grants for starting or expanding a business.  

 

Here’s another way the government can help put dollars into your business. The Small Business Lending Fund (SBLF), enacted into law as part of the Small Business Jobs Act of 2010, provides capital to qualified community banks and community development loan funds (CDLFs) to encourage small business lending.

 

What does that mean to the small-business owner? Your community bank can be a resource for commercial and industrial loans; owner-occupied nonfarm, nonresidential real estate loans; loans to finance agricultural production and other loans to farmers; and loans secured by farmland.

 

If you’re in the biomedical space, the National Institutes of Health (NIH) can be another resource for your business. The NIH is the largest public funder of biomedical research in the world, offering funding for many types of grants, contracts, and even programs that help repay loans for researchers.

 

Should you consider government funding for your small business?

Government funding may come with free technical assistance, including workshops, seminars, or onsite consultations. Sometimes government agencies bring together all the recipients of a particular grant, facilitating peer-to-peer learning. These gatherings often provide grantees with their first introduction to others delivering similar services in the same city—which, in turn, can lead to more potential funding or resource-sharing opportunities.

 

However, as you’d expect, a great deal of red tape goes hand-in-hand with government funding. We’re talking time-consuming paperwork, meticulous recordkeeping, and demanding reports. And you can anticipate that the agency providing government funds for your program will closely monitor the use of those funds. It’s also possible that the receipt of government dollars will discourage donations from private sources.

 

Crowdfunding

It all started in 1997, when a British rock band funded their reunion tour through online donations from fans. Since then, crowdfunding has become a smart option for entrepreneurs and others to raise money, awareness, and support for a business or a project, especially when turned down by traditional lenders.

 

Through online platforms like Kickstarter, Indiegogo, Fundly, RocketHub, and Fundable, your small business can receive needed funding, with donations ranging from as little as $5 up to $5,000 and more. In exchange, your business offers rewards like T-shirts, tickets to shows, or perhaps a personal call from the founder of the company. The better the reward, the better the chance of donations.

In addition to soliciting donations, you can use the crowdfunding concept to get a loan. The site LendingClub, for example, allows members to directly invest in and borrow from each other, essentially eliminating the banking middleman.

 

Should you consider crowdfunding for your small business?

According to the research firm Massolution, the estimated fundraising volume for global crowdfunding is a whopping $34 billion. But while there’s money to be had, crowdfunding has its drawbacks as well. If you don’t have a great story to tell or a terrific product to sell, then your crowdfunding bid could fail. Some crowdfunding sites don’t collect money until a fundraiser reaches the goal. If your efforts fall short, you’ve wasted a lot of time, energy, and other resources. And then there’s the risk of getting sued if you fail to deliver your rewards.

 

Venture Capital

VC—venture capital—spells big bucks to some companies. An entrepreneur will seek this type of equity financing when the company’s size, assets, or stage of development precludes more traditional funding sources, such as public markets and banks. Venture capitalists generally invest cash in exchange for shares as well as an active role in the invested company.

 

Should you consider venture capital for your small business?

Venture capitalists typically focus on young, high-growth companies, invest equity capital rather than debt, offer a longer investment horizon than traditional financing, and actively monitor the companies in their investment portfolios. Lenders like EarlyShares and MicroVentures generally require some equity cushion or security (collateral) before they will lend to a small business.

 

Venture capital provides businesses a financial cushion, but at what cost? Equity providers have the last call against the company’s assets and require a higher rate of return or return on investment (ROI) than lenders receive. So it’s vitally important to weigh the pros and cons before engaging in a venture capital relationship.

 

Angel Investment

Many startups opt for an angel on their shoulder. Angel investors provide funding for early-stage or startup companies in exchange for an equity ownership interest. Often referred to as a business angel, informal investor, angel funder, private investor, or seed investor, the typical angel invests anywhere from $25,000 to $1.5 million.

 

How do you find an angel investor? Forbes lists a variety of ways—through other entrepreneurs, lawyers, and accountants; AngelList; crowdfunding sites like Kickstarter and Indiegogo; or through a colleague or friend of an angel.

 

Check out organizations like CircleUp or Gust that provide online platforms to connect entrepreneurs with angel investors. CircleUp offers the largest online marketplace for investing in innovative consumer and retail companies. Gust connects startups with over 1000 investment groups around the world, resulting in more than $1.8 billion invested in startups to date.

 

Should you consider angel investment for your small business?

Angels can be a Godsend for a startup and the investment usually comes in the form of a lump sum. However, angel investors expect a high rate of return, often 25 percent or more. And as a major investor, your angel may also feel entitled to some control over your company’s future.

 

The Bottom Line

At the end of the day, when you’re considering how to fund your business idea, the best option is one that helps you achieve your business objectives with minimal risk or high rates. That often turns out to be invoice factoring with Triumph Business Capital. Triumph believes the hardest part about your job shouldn’t be getting paid. Get paid today.

 

Have questions about invoice factoring or the options listed above? Please leave us a comment below.

Factoring Funding

Is Invoice Factoring Right For You?

Invoice factoring is a saving grace for many industries, from transportation and staffing to small and mid-size businesses as well as government contractors. In fact, invoice factoring can offer welcome financial relief if you’re just starting a business, have bad credit, can’t get funding from banks, or are at risk of losing your business.

A simple process

Invoice factoring lets you convert your invoices into immediate cash to cover operating costs without taking on debt. You simply perform a service for your customer or deliver a product, and send your invoice to a factoring company like Triumph Business Capital to get paid. You immediately receive payment upon completion of the load or job being invoiced.

The process is simple and virtually seamless. Triumph purchases the invoice. If you’re a recourse client, Triumph takes the factoring fee out, then a small portion of that invoice goes into a reserve account, usually 5 or 10 percent. This “advance rate” of 90 or 95% is released once the invoice is paid.

If you’re in a non-recourse agreement, you receive 100% of invoice minus the factoring fee. Since the factor assumes all risk in this type of agreement, there is no reserve held in the event that an invoice does not pay.

The pros

You get money when you need it.

Invoice factoring is fast cash in the bank to help cover day-to-day expenses, restock materials, pay staff—or just about anything you need. The alternative? Wait . . . wait . . . wait . . . and then wait even longer—30 days, 60 days, or more—to get paid by clients. But with fast cash in hand, you can keep loyal customers on longer payment terms.

Your invoice factoring company grows with you.

Compare invoice factoring to a traditional bank loan and there’s no competition. Bad credit? Limited operating history? Loan declined? No problem. Invoice factoring companies base their decision on the quality of your customers’ credit, not your own credit or business history. You get cash based on your invoices, not your company’s net worth.

The cons

You might pay higher fees than traditional financing.

Invoice factoring can have higher fees than traditional financing—but it’s a small price to pay for peace of mind. Triumph’s fee takes into account the credit risk associated with your customers and the time it takes them to pay their invoices. In fact, invoice factoring provides cash flow that meets your business where it is today and can grow as your business grows because it’s based on your actual account receivables.

Always transparent, always fair, Triumph Business Capital offers options that match each client’s financing needs without incurring debt.

Your factor may work directly with your customer.

Invoice factoring companies work directly with your customers to collect payments on your invoices. You’ll need to ensure that the factoring company you choose is ethical, fair, and respectful. Triumph Business Capital is a proud member of the International Factoring Association (IFA), and strictly adheres to the IFA’s code of ethics. We ensure a smooth transition for both you and your customers.

Your financing depends on your customer’s credit.

Lastly, recognize that your customer’s bad credit may derail your financing. The factoring company may reject your invoices to any customer that isn’t creditworthy.

Three questions to consider

How do you know if invoice factoring is right for you? Ask yourself these three simple questions.

  1. Can my problem be fixed by factoring?
  2. Can I cover the cost of factoring and still make a profit?
  3. Are my customers creditworthy?

Ready to get started? Learn how Triumph Business Capital can help you factor your invoices—because the hardest part about your job shouldn’t be getting paid.

Business Factoring

4 Common Risks Associated with Factoring Your Invoices

Many businesses turn to Triumph business capital to get their invoices factored for relief from today’s financial pressures. Faster and easier than a bank loan, getting an invoice factored doesn’t rely on your credit or your years in operation. You simply convert your invoices into immediate cash to cover operating costs without taking on debt.

In some cases, factoring an invoice is the only way a business can get cash quickly. In others, it’s simply the smartest way to get cash today. But what risks are involved when it comes to factoring your invoicesinvoice factoring involve?

1. Can you trust the factor?

In its infancy, a few unprofessional factoring companies charged excessive fees and used deceptive business practices, giving the entire industry a black eye. Now, however, factoring is not only widely accepted; it’s a trusted funding source for businesses across many industries.

Of course, before entering into any business relationship, you should always exercise due diligence. Investigate how long the factor has been in business and find out where its headquarters are located. Check into the background of its management team. Go a step further and ask for referrals from current clients, and then research complaints or lawsuits using web searches, the Better Business Bureau, and your state’s Attorney General’s Office. Remember to trust your gut: if you feel you can’t build trust with the factor, walk away.

As a respected industry leader and a proud member of the International Factoring Association (IFA), Triumph Business Capital strictly adheres to the IFA’s code of ethics. Providing invoice factoring for over 7,000 small to mid-sized businesses since 2004, Triumph Business Capital is backed by the extensive assets of Triumph Bancorp, Inc., a financial holding company that maintains a diversified line of community banking, commercial finance, and asset management activities.

2. What about uncollectible invoices?

Triumph Business Capital offers two kinds of factoring arrangements to handle invoices—recourse and non-recourse. Both eliminate the hassles and headaches of collecting invoices, so you can spend more time growing your business, gaining more opportunities to find new shippers, or taking the next load because you’ve already been paid.

With recourse factoring, you ultimately take the responsibility for the payment of the invoice. If the customer doesn’t pay the debt, then the seller is liable to repay the factoring company. With non-recourse factoring, your company pays slightly higher fees, but takes on a lower risk. The factoring company assumes all the responsibility for collecting the debt. This lower-risk option is better for many small companies that can’t absorb the cost of unpaid invoices.

3. How will the factor communicate with your customers?

Triumph has designed a seamless process for our clients to transition to factor their invoices. To start, we create a lockbox to accept payments in care of your company. Either you create your invoices or we create them for you. In either case, all invoices are stamped by Triumph with a “Notice of Assignment.” Your debtor will know that the invoice has been assigned to Triumph Business Capital as a third-party partner to help you manage your Accounts Receivable financing.

4. Is your customer creditworthy?

Savvy business owners like you know that perfect customers are rare, and even your best customers may be slow to pay your invoices. At some point, your current or future customers may not be able to pay you at all.

That’s why it’s crucial to confirm your customer’s creditworthiness before conducting business with them. But routine credit checks can be a hefty expense for your business. Triumph Business Capital runs customer credit reports all day long—for free. It’s the Triumph advantage.

When you factor your invoices with Triumph Business Capital, we monitor the creditworthiness of your customers at every transaction. By doing so, we reduce the amount of risk you take, directly reducing the amount of invoices that get kicked back after 90 days. Invoice factoring is about reducing your financial risk, after all. Let’s get you paid.

The benefits outweigh the risks

Bottom line—the hardest part about your job shouldn’t be getting paid.

Factoring your invoice provides you with the immediate cash you need to run and expand your business. No more need to process invoices. Worried about your balance sheet? This financing doesn’t show up as debt. Factoring your invoices is easy, fast, and flexible.

Ready to get started? Factor your invoices with Triumph Business Capital today.

Factoring Invoices

How to Avoid the Net-30 Terms Trap and Actually Get Paid

It’s a headache and a hassle, and it causes complete confusion—It’s the Net-30 Trap. Does it mean you get paid 30 days from the date on the invoice, 30 days after the client bills their client, or within 30 days of what exactly? Do you get paid at all?

What does net 30 mean? It’s a power play—and you lose

Fact is, “Payment Terms Net 30” can mean different things to different people—but in most cases, the client wins. In essence, net 30 payment terms mean you’re extending credit to your client long after you’ve delivered as promised. Fair? I think not.

Chances are, you’ve seen or heard about large companies using their purchasing power to force a supplier to agree to terms that are more favorable to the large company—like a longer period of time to pay or relaxed rules for returning goods. How about the promise of future work to keep you at arm’s length when it’s time to get paid?

If you’re like most trucking or staffing companies, small to mid-size businesses (SMB), or government contractors, you don’t have great cash flow or a big cushion to fall back on. That forces you to finance your customers and accept their net 30 terms, or worse—net 60, or even net 90—leaving you looking like less than a good risk for banks or anyone else checking into your creditworthiness. And with few assets to balance such cash flow challenges, you’re not likely to have leverage to increase credibility and trust.

Three courses of action—and you win

1. Charge interest

One tried-and-true method to help ensure you’re paid—on your terms—is to charge interest if payment isn’t received on time. After all, the threat of interest for late payments is part of our everyday life, from credit cards to loans and even utility bills. In some cases, charging interest may be enough incentive for clients to pay on time.

2. Factor your invoices

Invoice factoring helps take the 30, 60, 90—or never—financial burden off your shoulders, allowing you to pay your bills and staff, stock up on materials, and sleep at night. You simply sell your invoices at a small discount to a factoring company such as Triumph Business Capital, and get immediate cash for your business. Learn more about how invoice factoring works in Invoice Factoring: The Antidote for Net 30, 60, 90, or Never .

3. Walk away

Your last course of action is to be willing to walk away. If the deal looks bad, or too good to be true; if you’re worried about a prospective client’s ability or willingness to pay—walk away before it’s too late. In the short term, taking the job gets you the work; but in the long term, you’d be taking on trouble—big time trouble.

Already stuck in a situation where you’re doing work and still not getting paid? Stop the work; your client will see this and make paying you a priority.

It’s time to get paid

Let’s face it: the hardest part about your job shouldn’t be getting paid. Free your business from the Net 30 terms trap and factor your invoices with Triumph Business Capital to get paid today.

Invoice Factoring

Invoice Factoring: The Antidote for Net 30, 60, 90, or Never

You do the work, deliver the product or service, and wait. And wait. And wonder—will you get paid on time or have to make countless calls to get your money?

Let’s face it. One of the biggest challenges facing small and mid-size businesses (SMB) is getting paid—especially since many companies are increasingly stretching invoice payment from 30 days to 90 days or even longer.

In the meantime, you have employee salaries, vendor payments, and taxes to pay—regardless of whether or not your customer pays you. How, then, do you cover your day-to-day expenses, much less expand your business? You could, of course, apply for a bank loan and cope with its cumbersome paperwork, lengthy process, and restrictive funds limit—not to mention possible rejection. Or your can opt for a more business-friendly way to go—invoice factoring.

What is invoice factoring?

To understand invoice factoring, you have to understand what it is not. Invoice factoring is not debt collection—running after businesses to pay their bills. Nor is it a business loan or line of credit.

You simply convert your invoices into immediate cash to cover operating costs without taking on debt. Invoice factoring helps take the 30, 60, 90—or never—financial burden off your shoulders and, frankly, lets you sleep at night.

Invoice factoring goes by several names—accounts receivable financing, AR factoring, and invoice financing. No matter what you call it, the process is the same: you sell your invoices at a small discount to a factoring company and receive immediate cash for your business. No more need to process invoices. Depending on your agreement, bad debt is also reduced as the factor may assume financial risk if the invoice is not paid. The bottom line—invoice factoring gives you fast access to funds with greater flexibility, minus the bad debt.

Less stress, more cash

You could say that invoice factoring is a stress reliever. It takes the billing and collecting off your plate and transfers it onto the factor’s. It also gives you greater control of your company’s finances by providing the necessary capital when your company needs it. Say goodbye to your customers’ accounts payable procedures or terms, or a traditional bank’s underwriting processes or delays—and your own cash flow problems. How’s that for control?

Another benefit? With fast cash in hand, you can pay vendors more quickly and take advantage of their discount offers, saving you money.

How does invoice factoring work?

Unlike conventional lending methods, invoice factoring is based on the quality of your customers’ credit, not your own credit or business history. You receive cash based on your invoices, not your company’s net worth. That’s welcome relief for start-ups with minimal capital or for businesses experiencing financial challenges or bad credit. Worried about your balance sheet? This financing doesn’t show up as debt.

 

The factoring process works quickly and easily: you deliver a product or perform a service for your customer and send your invoice to a factoring company like Triumph Business Capital. You immediately receive a cash advance on your invoice from the factor, who then collects full payment from your customer, and pays you the balance of your invoice, minus a fee. After verifying the creditworthiness of your customer, the factor may not accept invoices for a customer that has a history of late or missed payments.

Invoice factoring vs. traditional loan

Still not sold on invoice factoring?

Consider this: bank loan processing can take weeks or longer. In that case, you might as well wait for the customer to pay you. Invoice factoring, on the other hand, is fast. You can be paid within 24 hours. You decide which invoices to factor and when.

Invoice factoring is also more flexible than a bank loan. You aren’t locked into a long repayment period. And the cash you receive for invoices is unrestricted—you can use the funds however you want. Compare that to a business loan that requires the money to be used for specific purposes.

Who factors?

Invoice factoring has been around for over 4,000 years, dating back to the time of King Hammurabi of Mesopotamia.

In the 1900s, the most popular industries for invoice factoring were the garment and textile industries. There was simply no better way to continue to buy raw materials to produce clothing and textiles.

In the 1940s, transportation industries were added to the roster of factoring participants. From the 1960s through the ’80s, rising interest rates and bank regulations made invoice factoring more popular because it didn’t require the same sort of credit checks. Today, small to mid-size businesses finance their working capital by factoring over $1 billion annually.

“Companies of all sizes, with annual revenues from $10,000 to $10 million, continually approach us for invoice factoring,” says Steven Hausman, President of Triumph Business Capital, an industry leader headquartered in Dallas, Texas. “We have provided factoring for over 7,000 small to mid-size businesses since 2004. We have a long track record with the transportation industry. Staffing agencies, government contractors, and small businesses are increasingly seeking us out to help solve their cash flow challenges.”

The difference between recourse and non-recourse factoring

Just as there are varying client needs, there are various types of factoring arrangements. With recourse factoring, the client ultimately takes the responsibility for the payment of the invoice. Larger companies often use lower-cost recourse factoring. If the customer doesn’t pay the debt, then the seller is liable to repay the factoring company.

Non-recourse factoring allows companies to sell their invoices to the factoring company, which then assumes all of the credit risks for the collection of the invoice. Triumph Business Capital employs non-recourse factoring and assumes all the risk of collecting the debt. That’s a lower risk option for small companies that can’t absorb the cost of unpaid invoices, but it does cost slightly more than recourse factoring.

A small price to pay for substantial relief

What will all this convenience cost you? Invoice factoring can have higher fees than traditional financing, with non-recourse factoring fees based on a variety of considerations.

During the application process, Triumph analyzes the credit risk associated with your customers, the time it takes them to pay their invoices, and the monthly funding volume forecast for your business.

Triumph then offers pricing options that match each client’s budget and risk tolerance. As an added benefit, factoring fees are deductible as a business expense.

Why Triumph Business Capital?

Triumph Business Capital is a proud member of the International Factoring Association (IFA), and strictly adheres to the IFA’s code of ethics.

Originally called Advance Business Capital, the company changed its name when it joined Triumph Bancorp, Inc. in 2012. As a financial holding company, Triumph Bancorp, Inc. maintains a diversified line of community banking, commercial finance, and asset management activities. Since day one, the company’s vision has focused on four core business priorities.

  • Delivering value
  • Developing people
  • Demonstrating expertise
  • Displaying a commitment to enterprise success

“Many clients have been with us since our early days—testament to the integrity of our service and dedication to their business,” says Hausman. “Our team is professional and courteous. We’re a partner with our clients to help them find success with their customers.”

Triumph customers couldn’t agree more. A senior executive at JP Transport, LLC spoke about Triumph: “I have been beyond impressed with the service from Triumph Business Capital. My payments are processed on time every time. The online submission process is fast and easy. Reports on various payment statistics are helpful. I’ve been contacted by Triumph staff just to check on how things are going. Couldn’t be more satisfied.”

Is invoice factoring right for you?

If you’re often caught in the net-30, -60, -90—or never—battle with customers, let us help you determine if invoice factoring is right for your business. Our answers to the following frequently asked questions may get you one step closer to the cash flow relief and improved client relationships that invoice factoring provides.

Q. How much do I have to factor?

A. You have total control over which invoices you want to factor and when. Keep in mind, though, that once you decide to factor one of your accounts, it’s generally required that you factor all the invoices for that customer in order to reduce payment confusion.

Q. What are the costs?

A. The fees for invoice factoring depend on several items, including your customer’s credit risk, how long they take to pay your invoices, and your monthly funding volume. Always transparent, always fair. In any case, your factoring fees will stay the same throughout your entire contract and are contract determined before we purchase your first invoice.

Q. What if I’ve been rejected for a bank loan? Will a factor reject me?

A. Unlike traditional lending, invoice factoring does not rely solely on your credit. Invoice factoring is based on the quality of your customers’ credit, not your own credit or business history.

Q. Can invoice factoring improve relationships with my customers?

A. Absolutely! First, invoice factoring can help increase your credibility. Here’s how: invoice factoring is a recognized, established method for a company to optimize cash flow. Since banks have tightened credit policies for small businesses and startups, many companies now use factoring instead. A factoring company’s willingness to finance your invoices serves as an endorsement of your business as a solid company and a good risk.

Invoice factoring also allows you to give more attention to your customer’s needs—instead of worrying about their payments. Triumph has a decade of experience and dedicated teams that work closely with you to handle the invoicing and collecting of payments. These courteous professionals partner with you to enhance the relationship you’ve built with your customers.

Transitioning to invoice factoring is seamless. Triumph stamps each invoice with payment instructions known as a Notice of Assignment. It’s a very smooth transition for both you and your customers.

Lastly, invoice factoring helps you keep better track of your invoices. Triumph’s online account management, for instance, provides a full array of client reporting and real-time information. The goal is to keep you totally informed on the status of your customers and accounts—and give you the cash you need, when you need it.

Trucking? Staffing? SMB? Government Contractor? Get paid today!

Any business owner or consultant would readily agree that getting paid shouldn’t be the hardest part of the job. Thanks to factors like Triumph Business Capital, it doesn’t have to be.

Freight factoring lets trucking companies get the show on the road. They can pay drivers, insurance, fuel, and other expenses on time, and never have to turn down another job due to lack of cash in hand.

Staffing companies can relax, knowing that they’ll make payroll on time, every time. Small and mid-size businesses can easily replenish their operating capital and get back in business. Government contractors can have the working capital they need to keep the company going strong, without monthly minimums, long-term requirements, or “risk” contracts.

If large invoices or slow payments are standing in the way of your company’s production and expansion, it’s time to learn how invoice factoring can work for your industry—and how Triumph Business Capital can help you get paid today. Get started now, and leave the net 30, 60, 90—or never—far behind.

Invoice Factoring Company

To Sign or Not to Sign – This is THE Question

When did signatures become so important?

If you were back in the year 1473 (Islamic calendar 877-878, Hebrew calendar 5233-5234), you would find it hard to find a writing implement to use, and it would probably be even harder to find actual paper on which to sign. We take these things for granted today, but back then, paper and pen were luxury items that only the rich and powerful had any use for.

Today we take signatures for granted – we sign credit card receipts, we sign for packages, we sign (repeatedly) when we buy a car, and we sign electronically when we buy things online. Have you ever stopped to think “what am I actually signing?” Have you ever actually read your credit card receipt? It says that you are bound by the terms and conditions of your credit card contract – and if you’ve ever taken the time to read that document, I think you’d be surprised what was in there!

The message here is: read before you sign. Understand before you sign.

You would never sign a document that said you promise to pay back $100,000 without knowing…

  • How long do I have to pay it back?
  • How much is it going to cost (interest, fees)?
  • Can the money be used for anything I want?
  • What are the penalties if I don’t pay it back?
  • What do I have to put up as collateral?

If you are browsing the internet and there is a form to fill out, make sure you pay close attention to that form and if there are any disclaimers on there. If there are NOT, then the factor cannot bind you to anything since nothing has been defined.

However if you see something that says “By clicking “submit” you agree to our standard terms and conditions”, you might want to know what the standard terms and conditions are before clicking the “submit” button! Maybe it’s no big deal and it’s OK, but maybe not!

What if by agreeing to the “standard terms and conditions” you’re agreeing to that factor filing a lien on all of your company’s assets as collateral for a loan you’ve not yet even received? You think I’m kidding….I’m not.

The moral of this is: know what you are signing. Do not commit you or your business to something unless you understand what it is and are 100% sure you want to move forward with what you are signing.

Non-Recourse Factoring

What is Non-Recourse Factoring?

You’re a small business owner and you need financing. The first stop is your local bank where you get the sympathetic shake of the head from the loan officer. “Sorry, we can’t help with a loan but how about a checking account?” A checking account isn’t going to cut it when you need cash for your business.

You have bills to pay. What now?

There’s invoice factoring, an option that puts money in your pocket fast—often the same day. With factoring, you sell unpaid invoices to a factoring company like Triumph Business Capital, which pays you the amount you’re owed on the invoice less a small fee, and then the factoring company is responsible for collecting from your customer.

But what if your customer doesn’t pay?

There are two basic types of factoring: recourse and non-recourse. Recourse factoring is kind of like a loan in that if your customer doesn’t pay the invoice, you owe the money on that invoice back to the factor.

With non-recourse factoring, the factoring company evaluates the credit risk of your customer and agrees to take the loss if the customer can’t pay because the broker went bankrupt.

What Non-Recourse Factoring Doesnt Cover

Most non-recourse factoring contracts have a clause that says you are responsible when the customer refuses to pay an invoice because of a “dispute of any kind, regardless of validity.” When a customer says your delivery was late and is only going to pay 50% of the invoice, or holds up payment because there’s a document missing, these are not credit-related issues. The factor is probably going to ask you for its money back.

What Non-Recourse Factoring Does Cover

Let’s talk about what non-recourse factoring does cover.

If your customer’s business fails or files for Chapter 11 bankruptcy protection, the factor will be the one standing in line at the bankruptcy hearing, hoping to get paid. After all, it bought the invoice based on the creditworthiness of your customer.

Non-Recourse Factoring Gives You Control

As you can see, there’s a theme here.

To review, with non-recourse, if a factoring service agrees to buy an invoice and the customer can’t pay for it. But if the customer won’t pay due to your performance, you’re not covered. That’s not such a bad thing because you don’t want a third party handling discrepancies with a customer anyway. You probably worked hard to earn that business and if something threatens the relationship, it should be up to you to address it.

An experienced factoring company knows how to evaluate credit risk in your specific line of work. If you find that your factoring company is routinely asking you to pay money back (a “chargeback”) on invoices that you thought were non-recourse, get specific. Ask for details. Is it related to something that can be tied back to you and the performance of your business? Or is there some other reason the factor can’t collect?

Non-recourse factoring is a common and convenient way to turn something of value—your invoices—into the cash you need. Not all factoring agreements are the same so it’s important to read the contract and ask questions when you have them. If it’s confusing or you’re not getting answers, then maybe it’s time to look at someone else to factor your invoices.

Invoice Factoring Service

Which is better — invoice factoring or a loan?

If you’re having trouble getting approved for a loan, you’re not alone. According to the 2014 Small Business Survey, 44 percent of firms who applied for loans failed to receive any credit. The biggest reasons? Low credit scores, insufficient collateral, and/or weak business performance. In recent years, it’s become more and more difficult for small businesses to access working capital from traditional funding sources.

Fortunately, a loan is only one of many possible solutions. In this article, we’ll compare business loans to invoice factoring, a little-known alternative funding source that could help your business reduce risk, and possibly even pay less than you might for a traditional business loan. If your business is in need of funding, but has a low credit score or limited collateral, you’ll want to check this out.

 

Fast Approval. Fast Cash.

Unlike loans, which have extensive application requirements and long approval periods the application process for invoice factoring is simple and quick. In most cases, you can receive your funds in as little as 24 hours.

 

Low Cost. No Interest.

Depending on your interest rate, payment terms, and the amount of your loan, the long-term cost of a loan could be much greater than the amount you intend to borrow. You’ll pay interest over the life of the loan, so carefully examine your amortization documents before signing on the dotted line. In some cases, you may pay as much as double the loan amount.

In contrast, with invoice factoring, you make no interest payments and no monthly payments, because the funds are not a loan. Rather, they are a sale of your accounts receivables (invoices) for work that your business has already completed.

 

Less Risk. Less Stress.

Risk is inherent in any loan. If your business does well, and you manage your profits responsibly, repaying your business loan may be no problem. However, if business is slow, or if you encounter unexpected financial hurdles, you may be unable to pay your loan, risking late fees, fines, and even insolvency. With invoice factoring, the risk is much lower, because you are not receiving a loan. The money you receive is yours — you are just getting it sooner.

Unlike a loan, which requires regular payments, the funds you receive through invoice factoring will be repaid when your client pays their invoice. If you choose recourse factoring, you will ultimately be liable to repay the funds if your client does not pay their invoice — but this risk can be mitigated with careful credit checks. In addition, many small businesses and entrepreneurs may choose non-recourse factoring, which releases them from liability in the event their clients do not pay the invoice. However, this type of invoice factoring is more costly to obtain. Learn more about the two types of invoice factoring here.

 

Simple. Repeatable.

While it is possible to get multiple business loans, your approval for each loan will depend on your credit history, which includes your debt-to-income ratio. This means that once you get one loan, it may be harder to get an additional loan until you pay off the first. Because invoice factoring does not involve a loan, but is instead based on your accounts receivable, you can use invoice factoring again and again. As long as you meet the invoice factoring company’s requirements, and your invoices are reliably paid in full, invoice factoring can become an integral part of your business’s long-term plan for growth.

If your business needs access to working capital fast, without the risk, which sometimes doesn’t come with traditional loans, ask us how Triumph Business Capital can help.

 

Factoring

Invoice Factoring vs. Merchant Cash Advance

Which do you need in your corner?

Back in high school and all of my college years, I was an amateur boxer with a real passion for the sport. Boxers function on muscle memory, which is why professionals like Manny Pacquiao are able to throw over a thousand punches in a single match. But the one thing you never get used to, is getting hit. Let’s face it, getting hit HURTS, and the punches that hurt the worst are the ones you never see coming.

Right around the time I stopped boxing, I started my first company. I soon realized that having the right capital for merchandise and other expenses was incredibly important. I also realized that owning a business means you’re constantly hit with countless direct mail offers advertising small business cash advances and high-risk loans. The ads promise quick access to cash, with approval in minutes, and funding in days — but are these small business loans really as good as they seem?

Most businesses need access to funding at some time or another, but all funding sources are not created equal. In order to get the working capital you need, while avoiding high fees and reducing risk, it’s important to understand the pros and the cons of any business funding source. In this article, we’ll explore what a merchant card advance is, its pros and cons, and how it compares to invoice factoring.

What is a merchant cash advance?

A merchant cash advance, also known as a merchant card advance or “MCA”, is an alternative financing source that provides businesses with a lump sum of cash by purchasing a set amount of their future sales. Businesses pay back the loan in monthly installments, which are deducted as a set percentage of credit card and debit card sales, until the cash advance is paid in full. This form of cash advance is typically associated with incredibly high interest rates and should be avoided if at all possible.

How does merchant cash advance compare to invoice factoring?

Like a merchant cash advance, invoice factoring is an alternative funding source that offers businesses fast cash, without the strict credit approval requirements of traditional loans. However, there are some key differences that may make invoice factoring a better choice for your business.

Faster Access to Cash

Merchant cash advances and invoice factoring are both alternatives to traditional financing. Each involves a simple, quick application process with minimum credit requirements, making it easier and faster for small businesses to get approved — but while merchant card advances may seem like an equal option to invoice factoring, there are several “catches” that may leave you financially K.O.’d in the long run.

Lower Risk

First of all, merchant cash advancements typically involve more risk than invoice factoring. A merchant card advance charges you based on your “projected” sales, while invoice factoring companies purchase your existing invoices (also called, “accounts receivable financing”). Since merchant cash advance payments are solely based on a prediction, rather than an actual dollar amount, this means that if your future sales don’t meet your projections, you could end up making massive payments, with a much higher interest rate (usually significantly more than invoice factoring). The larger problem could be that the payments continue for a period beyond your revenue generation – Similar to getting punched in the face over and over again, month after month (trust me, not fun).

The Golden Rule of Finance

Simply put, the best financing structures have terms which match the useful life of the assets being financed. It makes poor sense to finance a house for 36 months or a car for 30 years. If your cash needs are for working capital, consider the benefits of a financial solution that matches the need.

Lower Overall Cost

Unlike merchant cash advance providers, who not only charge you the amount of the payment, but a crippling, sky-high interest rate, most invoice factoring companies solely charge a small percentage of the invoice total.

Additional Back Office Services

Because invoice factoring companies purchase your unpaid invoices and proceed to collect payment from your vendor directly, you may also benefit from the back-office services these suppliers provide, including billing and collections.

Before you consider taking out a merchant cash advance, be aware of the short and long term repercussions. If you’re in a high-needs situation, their unsavory (and borderline usury) interest rates may seem worth it, but keep in mind that anything that looks “too good to be true,” usually is. It pays to have the right company in your corner, and if you’re interested in exploring your invoice factoring options, talk to Blaine Waugh at Triumph Business Capital. He’ll help coach you through the right solution for your business and won’t make you run laps or do sit-ups (unless you want him to)!

 

 

Triumph Business Capital

The Payroll Problem

Spend less time stressing about making payroll, and more time working on your business.

In February of 2012, when I was eight months pregnant, my husband’s employer filed for Chapter 11 Bankruptcy. We lost our health insurance (even though we had been paying the premiums), and my husband’s bonuses and vacation pay (even though he had worked plenty of overtime). To make matters worse, he and his coworkers did not get paid for the last two weeks before the company folded. Now, more than three years and one more child later, we’re doing fine — but things were pretty shaky for a while.

Most employees don’t think twice about getting paid on time — until the checks stop coming. The problem of “making payroll” is more widespread than you might think. Just over 900,000 bankruptcies were filed in 2014, and about 800,000 are predicted for 2015, according to creditslips.com. Truth told, all across the U.S., business owners and payroll managers are sweating making payroll each month. Many major businesses, including Radio Shack, Wet Seal, and SkyMall, have filed for Chapter 11 bankruptcy this year already.

While the major corporations are the ones that make the news, payroll concerns can be even more worrisome for small businesses and startups. All businesses are required by law to pay employees in a timely manner, yet their customers may wait 30, 60, or even 90 days before paying invoices. This gap between receiving payment for completed work and making payments to employees can leave small businesses cash-poor in the short-term, with the potential to push them over the edge of insolvency.

In today’s challenging economic climate, payroll concerns have become an almost inevitable part of doing business. However, it doesn’t have to be this way. For companies with verifiable invoices for completed work, who are simply waiting for payment, there’s a simple solution to the payroll problem. It’s called invoice factoring.

What is Invoice Factoring?

Invoice Factoring is the sale of a company’s invoices to a factoring company, which pays the invoice immediately, minus a small percentage for its services. The invoice factoring company then takes over collections for the invoice. The business client gets cash fast, which can be used to make payroll. And, the factoring company gets paid when the client pays the bill.

How can Invoice Factoring Solve Payroll Problems?

  • Protect Personal Funds

    When business owners can’t make payroll, they often turn to personal funds, including savings accounts, friends and family, or even retirement accounts. To avoid lawsuits, IRS problems, bankruptcy and worse, most companies will use any means necessary to ensure employees are paid on time. With invoice factoring, you don’t have to resort to drastic measures.

  • Avoid Taking on Additional Debt

    Business loans are another option for business owners. However, loans must be repaid, with interest. Further complicating the matter, many small business owners and entrepreneurs do not have the capital or credit history to qualify for loans. Unlike a loan, invoice factoring involves the sale of invoices. That means no drawn-out approvals, no interest payments, and no additional debt as long as the invoice is paid.

  • Prevent Layoffs

    The last thing any employer in a growing business wants to do is lay off employees — especially when new opportunities are coming into the shop. Instead of letting employees go when you need them most, just to make payroll, invoice factoring enables you to keep all hands on deck, and pay them on time.

  • Reduce Expenses

    In a recent article published on inc.com, Donald Todrin, founder of the Northhampton, MA-based Second Wind Consultants, recommends raising cash by requesting a reduced payment from clients, in exchange for wiring the money immediately. He suggests accepting as much as a 50 percent hit on outstanding receivables, in order to cover your payroll. Of course, for savvy businesses that partner with an invoice factoring company, the cost of immediate cash is much, much less. Triumph Business Capital only charges a small percentage of your invoice in exchange for immediate payment.

  • Take Care of Your Employees.

    It’s not just about avoiding lawsuits, federal and state tax liabilities, and IRS penalties. And it’s not even just about keeping your business afloat. Whether you manage payroll for a small business or large company, paying your employees on time is just the right thing to do.

As an employer myself, I take the responsibility of paying my employees in a timely manner very seriously — especially since I know what it’s like when an employer drops the ball. If your business is struggling with making payroll, invoice factoring may be the right solution to help you bridge the gap between collecting payment and writing checks to employees. If you want to learn more, contact my friend, Blaine Waugh, at Triumph Business Capital

 

Truck Factoring

Recession-Proofing Your Business with Invoice Factoring

My first cousin, James is a long-haul trucker based out of Pennsylvania, and every time he comes through my hometown of Dallas, I meet him at a Denny’s and offer to buy him breakfast. He never says no. It’s not just because James likes his grits (and he does like his grits). James has four young kids and a wife waiting for him at home, and he could use a free meal. And me? I pretty much think truckers deserve it. After all, most American families couldn’t eat breakfast or dinner, for that matter, without the fresh goods truckers deliver each day. Yet, freight haulers don’t always know when their next load is coming in, or when they’ll get paid.

James has shared with me how stressful it is for his family when work slows down; and it may take weeks or months to pick back up again. But in the meantime, bills are coming due, and cash flow is dwindling. And, even though he may have hauled plenty of loads to pay the bills, he might not get paid for 30 days or more. Any small business owner can relate to the problem of having more month than money. That’s why I was pretty interested when I heard about invoice factoring, an alternative funding source that’s quite common in the trucking industry, but which can be used for just about any business that meets the invoice factoring company’s qualifications.

Freight brokers, independent truckers, staffing agencies, and government contractors are just a few of the business types that can benefit from this unique funding model. Here’s how it works:

What is Invoice Factoring?

Invoice factoring is the sale of your business’s accounts receivable (invoices) to an invoice factoring company. When you engage in accounts receivable financing, you receive immediate payment of approved invoices from the invoice factoring company, in exchange for a small percentage of each invoice. The factoring company then collects payment from your client.

How can Invoice Factoring help your business get through difficult times?

  • Access Working Capital from a Trusted Source

    During the recent recession, as mortgage lenders, banks and other financial institutions folded, invoice factoring survived, and even grew in strength. Because the invoice factoring industry is fueled by accounts receivable instead of loans, its foundation is stable. This type of financing has been around for hundreds of years, but it gained credibility after the recession. Triumph Business Capital is an invoice factoring company with over a decade of experience. Now that it is part of the Triumph Bancorp Group, it has the bedrock financial stability to provide its customers with even greater flexibility and capacity.

  • Pay Expenses in a Timely Manner

    With invoice factoring, you don’t have to wait for your clients to pay their bills in order to pay your vendors and employees, order equipment, and cover other business expenses. Invoice factoring companies like Triumph will pay your unpaid invoices in as little as 24 hours, so you can get the working capital you need, and get back to doing business.

  • Eliminate Collection Concerns

    When you process all your invoices with an invoice factoring company, you can end late-payment worries, and turn over the collections process to them. Triumph provides free credit checks for all your clients, and they offer both recourse and non-recourse invoice factoring for approved clients. This service ensures you will not be held liable if your customers do not pay their bills.

  • Avoid Late Fees

    If you are late paying your vendors or contractors, you may end up paying
    additional late fees and penalties. Worse yet, you may find it hard to obtain the services your business needs in the future. Invoice factoring companies only charge a small percentage of each invoice in order to provide you with immediate payment. During slow business periods or tough economic times, this may be less than the amount you might pay in late fees and penalties, if you are unable to pay your bills.

  • Get Cash Fast

    Sure, you could turn to a bank for a small business loan. But, banks charge high interest rates — and it can take weeks to get approved, if you are approved at all. With invoice factoring, approval is quick and easy. In most cases, you can get paid for your invoices in 24 hours.

  • Survive Tough Times Without Making Them Worse.

    In slow economic periods, the last thing a growing business needs is to incur more debt. Invoice factoring allows you to get the capital you need, without taking on a loan. The money is already yours — you are just getting it faster.

Financial difficulties come and go — but if you’re reading this article, chances are, you are already working to overcome your current business challenges. Next time you need a stopgap to cover upcoming expenses, you may want to consider invoice factoring. You can contact Triumph Business Capital if you’d like to learn more. And, next time you see a trucker, tell them “Thanks for breakfast.” They’ll know what you mean.

 

Factoring Company

How Invoice Factoring can Improve Cash Flow Forecasting

When I tell people that I’m self-employed and I work from home, I know what they’re thinking. “Work from home? Yeah, right. She probably spends her day scanning Facebook, taking naps and doing laundry.” That is so ridiculous. I don’t do laundry. Kidding — but it is frustrating when people don’t take you seriously just because you’re self-employed. If anything, those of us who work for ourselves are even more disciplined about setting hours, staying focused, and accomplishing our goals. After all, if we slack off and don’t complete our work for the day, we’re the ones who pay the price: not getting paid.

I work hard to meet customer deadlines, and perform work reliably — but even if I do my job perfectly, I can’t always predict when I will be paid. Many of my customers submit their jobs with P.O.s, and pay their invoices on Net 30 or Net 60 payment terms. That means that, even though I complete a job in April, I may not get paid until May or June. Add to that the fact that I don’t always know in advance what jobs are going to be coming in makes planning for the future a bit of a challenge. If you own your own business, or get paid on a contract basis, you feel my pain: while you’re waiting to get paid, your bills keep coming in. And, if you want to stay in business, you need to plan ahead.

Fortunately, I’ve discovered two powerful business tools that not only help me plan for upcoming expenses like taxes, salaries, and insurance — they can even help me get paid faster: cash flow forecasting and invoice factoring. In this article, we’ll discuss what these tools are, why they are important, and how they can help you better manage business income and expenses.

What is Cash Flow Forecasting, and why is it important?

As any business owner knows, the best-paying client isn’t always the fastest-paying client. However, waiting too long for payment can cause cash flow problems that make it difficult to pay debts, including payroll. Add unexpected expenses to the equation, and your company can quickly become insolvent.

Cash flow forecasting is method of predicting your company’s future financial position based on anticipated accounts receivable and expenses. You can use cash flow forecasting to determine your financial position at any given time — and to effectively prepare for upcoming costs.

Accurate cash flow forecasting can ensure that your business is prepared to pay its expected expenses, as well as those that may be less predictable. Some expenses — such as utility bills, insurance, and payroll, are generally the same each month. Other costs, such as unexpected repairs or a lawsuit, may take you by surprise. While cash flow forecasting can’t prepare you for every financial scenario, it can help you be better prepared for potential shortfalls.

Invoice Factoring

How Can Invoice Factoring Affect Your Credit Score?

“Sir,” I said, “I drive a paid-off Honda Accord. I pay all my bills on time. And my house will be paid off in three months. How could I be more credit-worthy?”

At 34 years old, I applied for a loan to purchase an investment property with 25% down, for a real estate business I started, and was surprised when the underwriter balked.

“You’re self-employed,” he said. “You still have a high debt-to-income ratio,” he added. “Send me your last two years’ tax returns, and your mortgage statement, and your first-born child’s Social Security Number,” he said.

Actually, he told me that I was going to need so much paperwork, he was going to have to back a truck up to my house to pick it up. In the end, I got approved for the loan — but not until I’d turned over a mountain of forms and waited many, many days.

Now, I think about building credit differently. I think before applying for loans or credit cards, and I also remember to pay bills and vendors on time. (Who knew those little late fees could result in dings on your credit report?)

I learned that credibility is currency — both figuratively and literally. For small businesses owners like me, as well as new businesses and entrepreneurs, working to improve your credit, and getting access to funds, can be a challenge. And, it pays to have more than a few tricks in your book when it comes to building credit.

One solution I recently learned about is called invoice factoring. This alternative funding source can help businesses access the funds they need fast, with minimum credit requirements, because it’s not a loan. As a result, you can get working capital without harming your credit. In fact, when you partner with a factoring company to factor your accounts receivable, you can build credibility with vendors, employers and contract workers, and improve your business’s credit rating. Here’s how it works:

  • Improve Business Credit With a Flawless Payment History

    Many businesses don’t pay their bills until they receive payment from their clients. While this approach sounds less risky, because it does not involve a loan, it can land business owners in hot water when debts go unpaid, leading to late fees, litigation, and dings on your credit report that can lower your credit score. When you partner with an invoice factoring company like Triumph Business Capital, you can receive payment for your outstanding invoices in as little as 24 hours, instead of waiting 30 days or more. This solution enables you to pay your bills on time, every time, without taking out a business loan.

  • Improve Credibility with Vendors and Contractors

    Paying bills on time doesn’t just improve your credit. It also improves your
    credibility. If you don’t pay your bills on time, vendors and contractors may stop extending credit or services to your business, in favor of clients who pay on time. At the least, clients in good standing will be given preference over your account. And at worst, vendors will eventually cease doing business with you completely. When you factor your invoices, cash flow delays will become a thing of the past, enabling you to pay vendors and creditors quickly, and improve business relationships.

  • Access Working Capital Without Affecting Your Credit Score

    Invoice factoring enables you to get cash for your business sooner, without incurring debt, or negatively impacting your credit score. In contrast, if you obtain a small business loan or other loan-based funding source, the debt will impact your credit score, as well as your debt-to-income ratio, which can make it harder to get approved for a loan.

When loans are repaid in full and on time, they can improve your credit— but if you are late on loan payments, or if you default on a loan, your credit score will drop dramatically. Invoice factoring is a sale instead of a loan, so it doesn’t affect your credit in this way. As long as your client pays their invoice, or your accounts are otherwise settled, your credit will not be affected.

 

It takes time to build successful business relationships and establish a trustworthy reputation — both of which are critical parts to any company’s growth. With invoice factoring, you can grow your business without hurting your credit. If you’d like to learn more, meet my friend, Blaine Waugh at Triumph Business Capital.

 

Factoring Invoices

5 Tips for Negotiating an Invoice Factoring Contract

The best factoring companies have your best interests in mind. Here’s how to select the right one for your business.

I was perfectly happy with my streaming Internet service until a few months ago, when a lady on the phone called and convinced me to sign a two-year contract inviting cable back into my life. It was only going to cost me a few dollars extra each month, and I would get to watch all the shows I had missed since my husband convinced me to “cut the cord.” I gleefully scanned the list of channels and awaited the arrival of the cable box. All was right with the world. Then, the bill came in. There were extra taxes, activation fees, state and federal charges. All told, I’m paying about $75 a month more than I was before. Now, I want to cancel the service — but I’ll be hit with cancellation fees if I do. Even worse? I’ll have to hear my husband say, “I told you so.” The moral of the story? It pays to read your contract.

I regularly work with growing companies that use invoice factoring to float cash flow, and I often see this common theme: Reviewing the invoice factoring contracts, and comparing invoice factoring companies, makes all the difference. I recently spoke with Steven Hausman, President of Triumph Business Capital, and he shared with me several key things to look for when reviewing your invoice factoring contract. As Mr. Hausman noted, most invoice factoring companies will already have contracts in place, meaning there may be little room for negotiation. However, by comparing contracts from several invoice factoring companies, and searching for the key items listed below, you can choose the best factoring company for your business.

Here are the top five things to look for before signing your invoice factoring contract:

1. Full Disclosure of Fees and Other Charges

From billing clients, to collecting payment, to managing payroll, factoring companies provide a number of valuable services to their clients — and reasonable service charges are to be expected. However, not all accounts receivable factoring agreements fully disclose these fees. While you generally get what you pay for, you have a right to demand transparency in all of your invoice factoring transactions. If fees are not clearly defined from the start, watch out — you may be in for an unwelcome surprise later.

2. Monthly Minimums

Be wary of invoice factoring agreements that include a minimum volume requirement per month. While it may seem simple to estimate your monthly volume today, what happens if your business changes tomorrow? What if your business experiences a slump in volume? Or, conversely, what if your business grows to the point that you have more clients who pay faster, and your factoring needs decrease? If you signed a contract with monthly minimums, you’ll have to pay minimum invoice factoring fees for each month when you don’t meet your “minimum sale volume commitment.”

3. Monthly Maximums

On that note, be sure to choose an invoice factoring company with the financial capability to support your business growth. If your invoice factoring contract includes maximum amounts that are too low to meet your future needs, you might be better off choosing an invoice factoring company with stronger financial backing. While we don’t recommend letting the size or capacity of your factoring company hold you back, we do recommend choosing a company that’s the right size, with the right resources, for your business. Bigger is not always better — but stability is essential.

4. Month-to-month Contracts and Exit Strategies

Is there an easy way to cancel your invoice factoring contract if you are not satisfied with the services provided? All invoice factoring companies are different, and beyond asking for recommendations and reading factoring company reviews, the best way to know whether an invoice factoring company is a good match may be to try it. If your factoring company doesn’t fit, you’ll probably know within the first few weeks. In order to find the right invoice factoring partner for your business, while keeping everyone fair and honest, look for factoring companies that offer month-to-month contracts. This approach lets you try out an AR financing partner for a reasonable time period, before entering a long-term contract.

5. Termination Charges

As with any contract, both parties in an invoice factoring contract are making commitments to one another. While it is reasonable and appropriate to require a term commitment, especially for larger transactions, it’s also important to ensure that any termination charges are reasonable as well. Make sure your contract spells out exactly how much you will be charged for early termination — and whether any additional conditions or penalties may apply. Less reputable factoring companies may over-charge you for early termination, or impose penalties designed to prevent you from ever leaving — just like the cable company did to me.

If you’re considering entering a contract with an invoice factoring company, be sure to read between the lines. A little extra time reviewing these five items may save a lot of headaches — and money — in the future. Oh, and one more hint from Mr. Hausman: If you’re not sure whether an item is negotiable, just ask. You might hear “no” — or you might just get a better deal!

 

If you want to explore more about invoice factoring, contact Blaine Waugh at Triumph Business Capital.