Borrowing vs. Factoring with Interstate Capital
This video describes the difference between borrowing and factoring.
Thought about borrowing money against your accounts receivable lately? Banks have never been tighter with their money than they are now.
That doesn’t mean nobody can borrow from a bank, but if your company’s not making money right now, you can bet they’re not going to make it easy.
Factoring companies don’t care if you’re making money or not.
They also don’t care what your balance sheet looks like. Companies like Interstate Capital make applying a breeze and approval comes in minutes, not weeks.
Funding happens in a few days, not a few months. In fact, most companies can receive an instant on-line rate proposal right from our web site at InterstateCapital.com.
From there, you can apply on-line and get an instant approval within an hour. In addition to providing far greater availability against your accounts receivable, Interstate Capital also acts as your credit department, assisting you to establish prudent credit limits for your customers.
We provide 24-7 online access for credit inquiries and instant approval on tens of thousands of companies.
In addition to providing credit and funding services, Interstate Capital provides another time- and money-saving feature that banks don’t offer—a professional collection department.
We send automated statements to your customers to assist them in paying you more quickly. We also make follow-up phone calls to obtain payment status.
In short, Interstate Capital advances more money, help you to reduce credit losses, and save you time and money by collecting your payments for you.
At Interstate Capital, there are no loan committees or regulators making our decisions for us. You are assigned a personal account manager to take care of your every need.
You have 24-7 online access to all your invoicing information and reports, including digital images of your invoices and supporting documentation.
Try Interstate Capital for a no-risk 90-day trial. We’re so confident you’ll find our service to be so user-friendly, you may never borrow money from a bank again.
What are Factoring and Forfeiting?
Factoring and forfeiting are two alternative methods of financing your business that some companies use in lieu of loans or other funding options. The two are very similar but have very specific differences when it comes to the structure of the agreement. In general, forfaiting and factoring are used by companies to raise the necessary capital to cover their payroll, the cost of equipment and supplies, and other debts.
Invoice factoring is an age old process where a firm will agree to buy a business’ unpaid invoices as a large batch at a discounted price. In return, the business receives a cash advance worth in the neighborhood of 70% to 90% of the full total due in the invoices. This is a great alternative to other forms of financing because you only need the accounts receivable that you already have on record.
Reverse factoring is a similar procedure that brings individual customers into the process. Rather than buy large batches of random unpaid invoices, firms can form an agreement with both the business factoring its invoices and high quality customers that owe that business money. By working with the high end customers, firms can rest easier that the invoice will be paid and may charge a far lower rate or just fees and charges for the process.
Forfaiting is a process generally associated with exporters. It functions in a similar way as factoring but, like reverse factoring, focuses on individual transactions rather than batches of invoices. The process usually requires a debt of more than $250,000 and allows for a certain amount of time for the invoice to be paid. This allows businesses to sell entire transactions and allows exporters to quickly fund their operations and allows for credit to be extended to your business for up to seven years.