Factoring is selling a company’s invoices (Accounts Receivable) today so you can get cash now instead of waiting 30 or 60 days or more. A bank loan is a liability since you owe that money back to the bank, which makes it a debt on your balance sheet. In factoring we focus on two main things: the validity of your invoices and the creditworthiness of your customers. On the other hand, a bank has stringent requirements that focus on several things including: financial history, cash flow, leverage, sales trends, etc. In addition, factoring requires little or no ongoing financial reporting, while bank loans typically include covenants and ongoing financial reporting. Primary Funding’s contracts are month-to-month and automatically renew, whereas a bank requires annual review, underwriting approval. Primary Funding can get you funded in just a few days, as opposed to the lengthy bank approval process that can take weeks or months.
Posted in: Factoring