As a small or medium-sized business owner, being able to manage cash flow is one of the most important parts of ensuring success for your firm. If an opportunity or large expense comes up while you have a large amount of receivables, it can wreak havoc with your ability to respond in the short term.
Invoice and PO Factoring allows you to plan ahead and partner with our firm to immediately access funds from your receivables while you are waiting for payment from your client.
Here are some examples of where receivables factoring makes sense:
- You have just subcontracted for a large company. Your team was scheduled to be paid by the contractor in 90 days, but you are approaching the 90th day and it looks like it will take a little bit longer.
- You want to expand your business and have a normal amount of receivables, but would like a lump sum advance to pay for the expansion while your receivables continue to come in.
- You need to buy new equipment and would like to save money by paying cash.
There are a variety of other scenarios that you probably find yourself in each year that would lend themselves to getting a line of credit or receivables financing with us.
What type of invoices or purchase orders do you factor?
In most cases, when your company has qualified for our services based upon your experience and revenue, all receivables will be considered. If the financing is for an individual invoice or purchase order that represents a large order and you otherwise qualify, your client’s reputation as a business or government agency can also factor in. A few years ago, when the State of California had a revenue shortfall, those who were bidding on and receiving contracts were asked to accept IOUs instead of payment. During this time period, there were contracts that looked like they might be the victims of economic triage even during the bidding process. In that sort of circumstance, we might take a close look at the opportunity and factor the risk on your behalf in advance.
When should we approach AFN if we want to factor a future invoice or purchase order?
- It is a good idea to establish a relationship with AFN at least several weeks prior to factoring a future purchase order or invoice.
- Once you establish an account with us, you will have several options available to you in addition to factoring, like establishing a line of credit.
- Purchase orders are typically the trickiest to plan for.
- If you are bidding on a government contract and need to execute your own purchasing for the contract immediately after it is rewarded, then it is a good idea to communicate your plans to us in advance so we can look at or understand the opportunity before the contract is awarded.
- Once it is awarded, expediting your paperwork to us will help make our decision and disbursement process fit your timeline.