Businesses Choose Us
Again and Again
for Their Invoice Factoring

Invoice Factoring
Examples

Is Invoice
Factoring For You?


The key to knowing if factoring is
for you is to not to look only at the
bottom-line accounts receivable factoring fee,
but also to consider how your company
may increase it's profits through factoring.

Here is additional information on factoring
to help you with your decision.

How are invoice factoring fees
and advance rates determined?
It is based on several factors:
The creditworthiness of your clients
Your monthly billing volume
Average invoice size
Average days to payment

Fees can range from 1.5% to 5 % of
the invoice's face value.
For example if the invoice's value
is $1,000; a fee of 3% equals $30.

What is an advance?
The amount of money you
receive immediately
when we buy your invoice.
The balance is returned to you when
your customer pays the invoice.
Advances range from 60-95%
of the invoice's face value.
For example if the invoice's value is
$1,000 an advance rate of 80% equals $800.
The balance of $200 less the
factoring fee is returned to you when your
customer pays the invoice.

Comparing Bank Lending Rates to
Invoice Factoring?

When compared to bank lending rates, accounts receivable factoring
initially appears to be very expensive.
Here are five typical questions/concerns
that are raised by potential factoring clients

  1. Wow! 3 points per month! That's 36 percent year!
    (Rates range from 1.5- 3 points)
    It is tempting to annualize the numbers, but that is an "apples and oranges" comparison.Banks loan money at an annualized interest rate, 12 percent per year for example. We purchase your receivables at a discount. The products are different and there are other inconsistencies to this inappropriate comparison

    The bank provides the money only one time, the day that you receive the loan; we provide money continuously. As an example, consider a bank loan for $100,000 at 12 percent. You receive the $100,000 just one time and then pay $1,000 interest per month interest and you still owe the $100,000. Or the bank could provide you with a line of credit that you use only when you need the money but the bank is charging you for that privilege and if you need to increase your line you need to go through the qualifying process all over again.

    When you factor $100,000 each month for a year you have the use of $1.2 million (12 x $100,000) over the year. Unlike a bank loan where you have just $100,000 one time. Assuming a 3 point discount, the fees over the year will be 12 x $3,000 or $36,000, which is still 3 percent of $1.2 million. And at the end of the year you have no debt!

  2. I'm only making 3% profit, how can I pay you 3 points?
    A company making only 3% net profit can do more business volume as a result of factoring, and the larger volume will result in a higher profit margin because fixed costs do not increase with volume. The added business at a higher marginal profit leads to an increased overall profit margin. As the volume increases, the cost of production decreases, so that profits increase. Fixed costs i.e., rent, electric, insurance, etc., increase very little or not at all with volume. An increase in business will not affect rent. Electric bills may rise slightly. Workers compensation insurance may rise slightly. These costs do not increase as do direct production costs.

    Let's graphically do the math assuming you can double your sales
    Without Invoice Factoring
    Monthly Gross Sales $50,000
    Cost of Goods Sold $30,000 60% of Gross Sales
    Monthly Gross Profit $20,000 40% of Gross Sales
    Fixed Expenses $10,000
    Variable Expenses $8,500 17% of Gross sales
    Factoring Fee N/A
    Total Expenses $18,500 37% of Gross Sales
    Monthly Net Profit $1,500 3% of Gross Sales

    With Invoice Factoring
    Monthly Gross Sales $100,000
    Cost of Goods Sold $60,000 60% of Gross Sales
    Monthly Gross Profit $40,000 40% of Gross Sales
    Fixed Expenses $10,000
    Variable Expenses $17,000 17% of Gross Sales
    Factoring Fee $3,000 3% Fee
    Total Expenses $30,000 30% of Gross Sales
    Monthly Net Profit $10,000 10% of Gross Sales

  3. But I only get 80% of my money upfront!
    (We advance up to 97%)
    Let's assume an advance rate of 80%. Let's also assume that you begin factoring in January. You have factored $100,000, we pay you $80,000 of that money upfront, with the remaining money making up the fee (3%) of $3,000 and the reserve (17%) of $17,000.
    Now in February, you once again factor $100,000 and receive $80,000. However. you also receive your January reserve of $17,000(assuming your customer pay in 30 days). So for February, you actually receive 97% of your money, instead of 80%.
    In the second month and going forward you are basically receiving 97% of your cash flow.

  4. But what if my customers take longer than 30 days to pay?
    You have several options, Assume your client takes 60 days to pay you bill your client in the normal fashion and simply allow 30 days to go by prior to factoring that invoice. That way you pay the 30 day fee.
    Another way is to factor your faster customers first for the cash you need





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 







 




  1. Why Businesses Choose Us
    Again and Again


    circle03_skyblue.gif Same Day Funding

    circle03_skyblue.gif Advance Rates that Exceed
    Industry Norms by 20%

    We offer cash advance rates up to 97%
    The typical maximum in the invoice factoring industry is 80%.
    We can offer you higher advances because
    of our unique financing capabilities


    circle03_skyblue.gif Flexible Contracts-
    We provide you with contracts
    that meet your cash flow needs,not ours.

    Unlike the others, we do not make
    you sign long-term contracts and we don't
    charge you fees when you are inactive.

circle03_skyblue.gif Invoice Processing
Not only can we offer you the most
advanced technolgy but we also maintain
the old-fashioned systems because
every client has different needs.

Unlike the Others, our objective here
is not to force you to conform to us,
but to get you the cash you need
in the quickest and most
efficient manner.

circle03_skyblue.gif Credit Management Services at No Extra Cost
We provide credit analysis on both
new and existing accounts.
We actually pull credit reports
from various reporting services that
we contract with and report back
to you as to whether or not
they are creditworthy

circle03_skyblue.gif Experienced Account Managers
We are seasoned professionals with
an average of 11years industry experience per account executive.
(Well above the invoice factoring industry
norm of 2 years)

circle03_skyblue.gif Personalized Service
You have one dedicated person and his
or her assistant who handle your account.

Unlike the others, with us you don't
have to start over each time you call
with a new person

circle03_skyblue.gif Please contact us today
and our seasoned invoice factoring
specialists will help you
get the cash you need TODAY

1-800-986-1854

Email Us
or complete the
On-Line Invoice Factoring Request Form

Invoice Factoring Links

Invoice Factoring Home Page
Invoice Factoring Benefits

Invoice Factoring Testimonials
Invoice Factoring Process
Invoice Factoring Examples

Trucking Factoring Home Page

http://jklfunding.com/blog/

 

 

 

 

 

 

 


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