Blog – Creative Capital Associates, Inc.

The Best Factoring Blog

CCA — Tue, 02 Jul 2024 14:53:00 +0000

Hello, welcome to the factoring blog of Creative Capital Associates, Inc. We are a factoring company that has been providing services to growth companies nationwide since 1997. Creative Capital Associates is strictly an invoice factoring company – meaning, you submit invoices for work you completed and we wire you an advance based on the invoice being verified.

We do not offer any fin-tech cash advance form of loans.

This blog has been active stretching all the way back to 2005. You can find all sorts of fundamental information on how factoring works by scrolling through our archives over to the right. There are absolutely no pop-ups, ads or annoying clickbait.

Creative Capital Associates continues everyday to offer you the best there is in factoring services for your business. The company is going strong, call right now or email us with any questions you may have about your business.

We look forward to being a partner in your success.

Outsource Cashflow

CCA — Thu, 26 Sep 2024 16:16:14 +0000

It is very typical for companies to outsource internal services to firms that provide such services for economy and efficiency. Services such as payroll taxes, human resources, bookkeeping, payables, collections, and accounting are commonly outsourced. Invoice factoring can be considered outsourced cash flow. By factoring accounts receivables to better manage and even out cash flow short falls, a company can save time and money lost on scrambling to make ends meet. A factoring company provides credit management and collections capabilities that are built into the factoring process and are included in the cost of funding. These added features can offset the price of using factoring when avoiding a bad account debtor or collecting on a difficult invoice is taken into account. When dealing with the stigma attached to needing invoice factoring from outside sources, it may be better to recognize it for what it is, outsourced cashflow.

On The Spot

CCA — Fri, 20 Sep 2024 14:02:18 +0000

Single invoice financing is also known as spot factoring. This is when a company is only interested in factoring one invoice, one time. Most of the time the invoice being financed is a high dollar amount. Generally, factoring companies will not do spot factoring due to the risky nature of the transaction. If there is a problem with the account debtor paying the one particular invoice there will be little or no recourse available. So the first step would be to determine the creditworthiness of the customer who owes on the invoice. Unless they are a household name Fortune 100 company, there’s not going to be much appetite to fund. Also a factoring company will look closely at the terms in the contract. Is the language specific enough regarding payment for completed services? But the predominate reason a factoring company will be reluctant to do spot factoring is the amount of work that goes into getting the account started with the client and doing proper due diligence on the client’s customer. A factoring company would much rather rely on an ongoing factoring relationship with a variety of account debtors.

Customer Planning

CCA — Mon, 16 Sep 2024 13:05:47 +0000

Here is how important deciding who to & how to sell is when it comes to invoice factoring or any type of commercial financing for that matter. When accounts receivable is the collateral for borrowing, the transaction must be straight forward and easy for the factoring company to verify. If the customer does not have a fair to good public credit rating, there will be a problem. If the customer is located in the US, but bills out of their parent internationally, that creates a problem. The work needs to be formally accepted, meaning that it cannot be invoiced today for work that actually gets finished next week. Asking the factor for a credit rating before setting up terms with a new customer for factoring will help. Having customer engagement documents which spell out exactly what is transpiring will help as well. In this turbulent business climate getting business right trumps getting the gig.

Considering Factoring

CCA — Wed, 11 Sep 2024 14:09:11 +0000

When looking at invoice factoring to help grow a business focus on three main criteria. The first is flexibility. Will the factoring company allow an arrangement that works within the framework of the business model. Whether it is time constraints, period commitments, picking individual accounts, or exit fees, will the factor provide the flexibility to allow the financing to work optimally. The second issue of course is cost. A business that is thinking about accounts receivable factoring as a solution wants to incur the best competitive rates. And lastly, the daily relationship. Unlike a bank loan where a computer program on some unseen server is the gatekeeper to the transaction, with invoice factoring it is a very hands on experience. Each invoice needs to be dealt with directly in terms of creditworthiness, verification and collection. This means regular contact with the factoring company on a host of issues. Knowing that you have a business advocate to help grow the business rather than having a frustrating impediment is as crucial to successful factoring as anything else.

Size Matters

CCA — Tue, 28 May 2024 14:46:14 +0000

Invoice factoring deals are priced by their size. The more commitment to utilize accounts receivable financing the lower the rates. Factoring companies characterize the deal by the monthly amount of invoices to be financed. Generally the tiers are; below $50K a month in invoices is a small start-up and the rates will probably be around 3 – 3.5%. Above $50K moving up to $150K can expect to see rates drop below the 3%. If the deal is around $250K invoices per month the rates drop to around 2%. Once the deal gets above this size, the rate structure changes to an asset based loan transaction. The fees become interest on funds in use. More like a standard line of credit. But the point is, the more volume in funding a factoring company can expect, the lower the actual cost to do invoice factoring.

The rates, or cost of accounts receivable factoring will not change from day to day. Once the relationship has started, the rates which have been negotiated, remain in place regardless of the amount of invoicing being funded each month.

Discipline

CCA — Tue, 21 May 2024 05:18:17 +0000

Whether factoring your invoices or not, it is critical to be focused on the cash flows within a company. Incoming accounts receivable and outgoing accounts payable, growing the business is the same even without a factoring company. It takes discipline to keep from spending more than the invoices bring in. The discipline has to be there, all invoice factoring affords is the ability to accelerate the process. Without the discipline to hold back costs, create an efficient profitable business, and effectively increase revenues, accounts receivable financing will not help. But with good fiscal management, invoice factoring can be utilized to ramp up growth without having to raise equity or increase long term liabilities.

Payoffs

CCA — Fri, 17 May 2024 15:21:33 +0000

Before getting started with invoice factoring, does the business have an existing loan with a bank? An important calculation to be examined when contemplating accounts receivable factoring is how to pay off a previous loan. Many times businesses have a line of credit with a bank which they have outgrown. Seeking invoice factoring may be a suitable replacement, but the UCC-1 needs to be free and clear. The question becomes, can the business withstand the loss of income due to paying off the existing loan? Because the accounts receivable has been used as collateral for the old loan, it must be paid off in order for the factoring company to begin making advances on the invoices. That payoff amount will come out of the operating budget. Most companies have spent that slowly over a long period of time. Having to pay it back all at once can be painful, and makes the decision to use invoice factoring an important consideration.

The Personal Waiver

CCA — Wed, 08 May 2024 06:47:54 +0000

Commercial financing, like invoice factoring, regularly requires the owner of the company to sign a personal guarantee waiver. For a factoring company, using a personal guarantee is not a preferred method of repayment. From the factors standpoint, it is seen as a deterrent to fraudulent behavior.

When factoring invoices the turnaround on repayment is normally 30 – 45 days. The process of recapturing funds from an advance by going after the owner personally could take a couple years by the time it goes to court and a judgment is rendered. It simply takes too long to be considered a viable option. Factoring companies generally require a personal guarantee for two reasons; 1.) protection from a planned conspiracy to defraud, and 2.) the factoring company has its own line of credit, and its bank requires that all factoring clients sign one.

By signing a personal guarantee the factor will not be looking for you to repay an unpaid invoice out of your pocket. It is more expedient to take the lost amount out of the reserve or set up a repayment plan by reducing the advance rate. Make sure you understand the true liability of signing a personal guarantee for accounts receivable financing before making a blanket statement like you refuse to sign one.

Getting Started With Factoring

CCA — Fri, 03 May 2024 14:20:02 +0000

Often when a company realizes that invoice factoring might be able to help their business, they need to get started right away. It is imperative for them to get funded as quickly as possible. Luckily factoring companies do not need to go to extreme lengths to get an account set up. As a factoring company we understand the necessity to alleviate the pressure created by a lack of capital. Making sure that everything is in order, having documents ready, invoices prepared, and being familiar with commercial financing will guarantee a quick response. Each factoring deal has its own set of circumstances and getting details out in the open quickly will again insure a fast turnaround. If issues come out in background searches rather than from the borrower it can slow the process down considerably. We do everything in our capacity to get you up and running with plenty of capital to get back to business. Accounts receivable financing can be a great tool for growth as well as an answer to immediate cash flow problem. We understand this and are ready to help.