Fees

Fees are determined on a customer by customer basis, and we review credit quality of the your customer, the average invoice amount, the average time it takes the customer/debtor to pay their invoices, health of the cus’s industry, and concentration and dilution ratios. Fees are typically 3% to 6% for the first 30 days and .75% to 1.35% for every week beyond 30 days.

Factoring companies have administrative burdens associated with underwriting and servicing the account, which include payroll costs, credit analysis reporting, software support, tax monitoring, and cost of funds. These administrative burdens are driven by the characteristics of the invoices that we purchase from your business.

Recourse

If the customer does not pay within the agreed upon maximum aging date, your business will be required to refund us the amount advanced on the invoice. This refund can be accomplished in 1 of 5 ways:

1. Swapping a bad invoice for a new one

2. Taking a deduction from new invoice advances or rebates due to your business

3. Pulling the funds from a reserve holdback account

4. Your business can refund us in cash

5. A combination of any of the 4 options above

Reserve Holdback

This is required to be funded and can be established by assigning us an invoice at a rate below the agreed-upon advance rate, withholding funds from rebates, or your business can fund this in cash. We typically require a reserve amount around 10% of your monthly invoices. 

Establishing a reserve account protects your business and reduces our risk in the event your customer short pays or doesn’t pay their invoice. For example, if we do an 80% advance, we would fund 75% and put 5% of that advance into a reserve escrow account. We would do this until we reached the minimum reserve amount.