Is factoring a type of loan?
No. Even though invoice factoring is commonly referred to as ? factoring
loans?, it is a financial practice involving a B2B transaction, but no bank. To
further explain, account factoring, it is when a company, like Peacock Capital,
purchases your accounts receivable invoices at a discount and provides you with
immediate cash. A traditional bank loan uses your company?s accounts receivable
as collateral, where account receivables factoring looks primarily at the
financial soundness of your customers, not your company. Banks are regulated
heavily; large finance companies generally are public and driven by pressures in
the financial markets. When times are tough, banks and finance companies limit
lending. A small business, too new to have a track record, with a weak balance
sheet, with a history of financial problems, in turnaround mode or undergoing
big changes, often cannot find a willing lender at any price. That is why
factoring is best for small to mid-sized businesses.
Does a bank loan make more sense for my small business than invoice
factoring?
No. Banks often have restrictive lending requirements relating to cash flow,
profitability, equity, and years in business, which prohibit them from making
loans to small to mid-sized businesses. Since factoring companies are not in the
lending business and there is really no such thing as ? factoring loans?, the
decision to purchase invoices is influenced primarily by the quality of your
customer base and their financial stability, and not the financial fundamentals
of your company.
Do I have to jump through the same hoops for account receivables Factoring as
with bank financing?
No. All Peacock Capital needs to produce a proposal is a completed
pre-approval form, summary of accounts receivable aging, summary accounts
payable aging and some other basic financial information.
Do I have to be an established business operating a minimum number of years
to start an account factoring relationship with Peacock Capital?
No. Peacock Capital prides itself on working with companies in all stages of
business, including recently developed small to mid-size businesses. Even pure
start-ups are usually not a problem for Peacock Capital. If your company has
verifiable invoices and creditworthy customers, Peacock Capital will happily
speak with you about an account receivables factoring relationship.
Are my receivables held as collateral while my company is factoring?
Yes. Peacock Capital requires a first position on all accounts receivable
while you are factoring with us.
Does Peacock Capital require additional collateral when my company is
factoring?
No. Within our traditional account factoring programs, a first position on
accounts receivable is all that Peacock Capital requires while you are
factoring. In some situations, Peacock Capital may take an available security
interest in other company?s assets.
Afra AmirSanjari is the Principal for Peacock Capital. Peacock Capital
specializes in solving the cash flow challenges of Small/Medium Businesses,
Government Vendors and Individuals with innovative financial solutions by
providing a network for securing operating capital.
