DB Squared Inc. Business Finance

Transcription

1 DB Squared Inc. Business Finance Complete Guide to Invoice Factoring What is invoice factoring? Benefits of factoring invoices for a staffing agency Hidden costs of invoice factoring Questions to ask a factoring company What types of businesses should consider factoring?

2 Complete Guide to Invoice Factoring What is Invoice Factoring? Receivables factoring (also called invoice factoring or invoice discounting) is a business finance tool that provides a staffing agency with immediate access to money owed to your business by your clients, without waiting 30, 60, 90 days or even longer for the invoices to be paid. Expedited cash flow gives your agency more flexibility and options when it comes to meeting operational expenses and reinvesting working capital in your business. Factoring could allow you to expand, take on new customers, reduce expenses and time associated with collections activities, negotiate better terms with vendors and suppliers or manage your own payables more easily. Here s how it works: 1. Your agency generates a client invoice. 2. Instead of having to wait for weeks or months for your customer to pay the invoice, you sell (or factor) the invoice to DB Squared and *immediately gain access to working capital. 3. When we purchase (or factor) an invoice, we typically advance from 80-98% of the face amount of the invoice at a minimal fee (or discount), usually from 1-6% of invoice total. The remaining balance is held in reserve. 4. Once your customer remits payment for the invoice to us, the reserve is also released back to you. *same day funding available to clients who regularly factor receivables with us

3 We would be happy to provide you with a free proposal for invoice factoring, even if you are already working with another factoring company. Factoring receivables enables you to focus on growing your business rather than chasing invoices or performing collections. 1. Complete services for a client and generate an invoice 2. Sell the invoice to DB Squared for a fee (as low as 1%) 3. Receive an advance from 80-98% of the invoice s face value from DB Squared on the same day 4. We collect payment from your customer 5. We return the reserve amount to you

4 Complete Guide to Invoice Factoring The Benefits of Factoring Invoices Invoice factoring is especially helpful for staffing and temporary employment agencies, since staffing agencies often incur expenses long before customer invoices become due. You can turn the money your customers owe you into immediately available cash when you factor - or sell - customer invoices to a factoring company like DB Squared. Rather than waiting weeks or months for customers to pay, you can receive cash for factored accounts receivable invoices immediately, which may enable you to: Offer more appealing credit terms to your clients as a competitive advantage Replenish cash flow more quickly, making management of day to day expenses much easier Leverage purchasing power to negotiate better terms with suppliers and vendors Expedite cash flow to more easily pursue bigger clients and new business opportunities Reduce time and resources needed for accounting and collections activities Reduce or even eliminate financial risk from bad debt by working with a non-recourse factor The Benefits of Factoring with a Non-Recourse Factor DB Squared is a non-recourse factoring company (or non-recourse factor). When we factor or purchase an invoice, we also assume the credit risk for that invoice. If you factor an invoice with us and your customer is unable to pay for credit reasons, we absorb the loss not your business! By contrast, with recourse factors do not assume the credit risk for factored invoices and may require you to repurchase invoices that remain unpaid as well as cover legal or collections costs incurred.

5 Our clients commonly cite one or more of these drivers as relevant to their decision to factor invoices with us: Customers with extended terms, who are slow-paying, or who usually take 30 days or longer to pay Desire to offer longer payment terms to customers as a competitive advantage Need for immediate access to working capital to take advantage of new business opportunities, take on new business, serve larger clients or accommodate big orders Need to improve cash flow to meet operating expenses or pay vendors or suppliers more quickly Desire to reinvest in their business more quickly

6 Complete Guide to Invoice Factoring Hidden Costs of Invoice Factoring When comparing factoring proposals, remember to look for additional costs or add-on fees not just at the discount rate you are being offered. These fees and charges may seem small but when you do the math you can clearly see that they quickly eat into your profits. What Sets the Top Factoring Companies Apart? Clients Retain Control: For instance, we don t require clients to factor a minimum number or dollar amount of invoices. Plus, our clients have the option of retaining control of sending invoices or delegating the work of generating and mailing invoices to us. Professional Customer Service: We rely on our service and performance to earn us client patronage and referrals. Competitive Factoring Fees: Our factoring fees usually range from 1% to 6%. High Factoring Advance Rates: Clients typically receive 80% 98% of the face value of invoices factored with us. No Long Term Contracts: Many factors require clients to commit to long term contracts not us! We want to earn repeat business and referrals through our performance. No Early Termination Fees or Hidden Auto-Renewal Windows: Check the fine print! Some factors charge hefty early termination fees and hide other penalties in auto-renewal windows assessing penalties as high as 10% of a client s line of factoring credit making these fees almost unpayable. Non-Recourse Factoring: We assume the credit risk for invoices purchased. Same and Next-Day Funding Options Transparency No hidden fees: No application fees, notification fees, reserve release fees, schedule or invoice processing fees, credit check or due diligence fees None!

7 Some factoring agreements include hidden fees that could negatively impact your revenues while factoring: Long term contracts with stiff penalties and lots of paperwork to jump through for early release Penalties or rate hikes that may be assessed if monthly minimum requirements (number, percentage or dollar amount) are not met Add-on or administrative fees for: proposals, quotes, credit checks, due diligence, notification, schedules or processing invoices Introductory rates, fees or other favorable conditions that expire Lost customers due to poor customer service Recourse factoring buy-back stipulations or assessment of collections or legal fees

8 Complete Guide to Invoice Factoring Use this Check List to Compare Factoring Companies: What is your fee structure? What are your terms? How long does it take to get set up? How quickly will I receive funding on factored invoices? How do you evaluate debtors? Can I retain control of my invoicing? Do you have monthly minimum requirements? Will I have to sign a long term contract? Is there a penalty for early termination? Is there an auto-renewal window? Do you charge for processing invoices or schedules for payment? Can I get free credit checks on my customers? Are you a non-recourse factor? Do you have the capital to grow with me?

9 If one or more of these describes your business, you may benefit financially by factoring invoices: Cash flow isn t keeping up with operational needs or isn t letting you grow as quickly as you desire You are tired of waiting on payments from all or some of your customers You want stronger customers, or need money in order to take on bigger customer accounts or larger orders Your company is fairly new, so it is not yet eligible for a line of credit or other types of financing Limited resources means you can benefit from expedited cash flow and lower costs for invoicing, accounting and collections

10 About DB Squared Our goal is to help you get from where you are today to where you want to be tomorrow. Work with a Leader in Invoice Factoring Visit and complete any of the quick quote forms you find on our site we will reach out to you with more information Visit and download and submit a PDF application or complete the online form Call us at or us at [email protected] We are in business to help your business succeed. We evaluate each application by looking at the big picture, not just a credit score or an asset list. This personalized approach, coupled with one of our flexible business financing products, can help take your business to the next level. We would be happy to provide you with a no-cost, no-obligation quote for invoice factoring, even if you are already working with another factoring company. About DB Squared Inc. We specialize in providing business financing for any size or type of U.S. organization. With more than 100 years combined experience in invoice factoring, our team is ready to help you grow your business to the next level. Financial tools include: Invoice factoring Business cash advances Merchant cash advances Equipment leasing, including commercial truck and trailer leasing Construction financing including factoring, equipment financing and purchase order financing