Collection Factoring is different from collection agencies; collection factoring is a structured transaction that has two components:
- A factoring commission is charged against the face value of the invoice amount in exchange for Capstone taking on the credit risk on the accounts receivable
- An interest rate is charged against the advance if one is requested.
The interest charges run through the date the account debtor pays the invoice and is deducted from the invoice payment along with the commission charged for guaranteeing the creditworthiness of the account debtor. Not every business will be able to take advantage of this type of factoring to cover cash flow. Companies with a positive net worth and profitable operations qualify for this type of factoring.
In cases where credit terms call for a client paying cash later than when that cash is needed by the business, collection factoring is a more cost-effective method than collection agencies.
Disadvantaged Business Enterprises
Factoring can close serious gaps in cash flow and allow you to continue operations without worrying about covering necessary expenses. Not all factoring options are alike, however. We know that every business is unique with its challenges, and each deserves an individualized approach to solving their cash flow shortfalls. With flexible factoring structures, Capstone will customize a program specific to your business that will help achieve your growth goals. By utilizing factoring, you can shift your focus from waiting on cash to working on your next project without the stress of inconsistent cash flow.
Stop running your business job to job, and start reaching your full potential. Speak to Capstone about accelerating your cash flow today!
Please call us at (212) 755-3636.