Capital sourcing for successful growth oriented companies.

Frequently Asked Questions

What is Accounts Receivable Financing (A/R Financing)?

A/R financing (a,ka. Factoring) is simply a method of business finance, which releases the cash, already tied up in accounts receivable for immediate use in your business.  When applied to business, factoring is simply the use of the company’s outstanding invoices, to raise capital. This facility bridges the gap between the times the invoice is processed to the time payment is received.   There are also hybrids of A/R Financing, such as A/R Lending and Asset Based Financing that Forward Funding LLC can assist you with.

Would my business qualify for A/R Financing?

Almost any business can use our A/R financing sources. The guidelines are simple; the transaction must be on credit terms for a business-to-business transaction. Any invoice may be funded, provided the product/service has been completed and delivered.

What about new businesses? Can they qualify for Forward Funding?

Our sources base their decisions and pricing structure for A/R financing mainly on the credit worthiness of your customers. This means, unlike banks we do not need three - five years of business under your belt before you can get financing.

Purchase Order Financing or Trade Financing can be extremely beneficial to new business as well. This type of financing is based on the credit worthiness of your clients and most often will also require a personal guarantee from you and your major partners.

I already have a SBA (or other Business Loan). Can I qualify for Forward Funding?

Typically, the SBA and other banking institutions file what they call a “blanket UCC” this is a lien on all of your assets including your equipment, invoices, etc.  Since A/R and PO financing is an assignment of those invoices to Forward Funding’s source, this may make this type of financing impossible. If the value proposition is such and if it makes since to you and the source, it may be that the source will pay off your loan, and you will then owe them the balance due. Payments can be withheld from your advance on your receivables.

How else will Forward Funding help my business?

The benefits received through A/R Financing vary from business to business, however the increased cash flow is the one factor common to all of them, and therefore, the business may experience the following:

·         Increased buying power, buy in larger quantities and receive further discounts.

·         Receive supplier discounts for paying COD (Discount for cash)

·         Increased sales through increased production

·         Reduction in administration overheads

·         Enhanced credit rating, through paying creditors on time

·         With discounts on supplies, you can have the competitive edge on your opposition

·         Be cash ready to fund unusually large orders

·         Increase orders by offering your clients credit terms

·         Enhanced credibility with customers – they now know you have the ability to fulfill orders consistently (very useful when working with blue chip companies)

·         Increased profit through increased sales and overhead reduction

·         Aggressively seek new business

·         Have the confidence to take on new accounts

·         Effective time management – no need to waste your valuable time chasing accounts.

What are the costs of A/R Financing? How are the fees calculated?

The fees vary from business to business due to such variable factors as the volumes funded per month, the number of debtors serviced and the time taken by debtors to pay the invoice.  

After assessing the benefits that the business will receive; you will soon realize that A/R financing can increase profits. The business may qualify for prompt payment discounts, discounts for bulk purchases as well as savings in your own administration expenses.

When considering fees charged and the cost effective debtor administration service provided, factoring becomes very affordable. In fact, clients report that they are better off as the savings outweigh the costs.  All fees are, of course, tax-deductible expenses.

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