FAQ

Q: What is factoring?

Q: How does it work?

Q: What is a factoring company?

Q: What types of businesses do you factor?

Q: Who can’t qualify for factoring?

Q: Why would a company sell their receivables?

Q: Do I need accounts receivable financing?

Q: Is factoring a type of loan?

Q: Wouldn't a bank loan be easier?

Q: If a factor buys my invoices, how do my customers get billed?

Q: How quickly do I get paid?

Q: How are the fees for factoring services determined?

Q: Do I need to sell all of my invoices?

Q: What is the difference between factoring invoices on ‘non-recourse’ and factoring invoices ‘with recourse’?

Q: What about the location of the client's customers?

Q: Are there any other personal or company encumbrances required?

Q: How long do I have to commit to factoring my invoices?

Q: How will I know the status of my factored invoices?

Q: How do my customers know where to send payments?

Q: How do I receive my money from the factored accounts?

Q: Can I factor my receivables if my company already has a loan or line of credit with a bank?

Q: What is the minimum amount of invoices I can sell?

Q: Do a company’s customers always know when a company is seeking financing through factoring?

Q: What will my customers think?

Q: How do I qualify?

Q: How do I get started?

Q: What is factoring?

A: Factoring is the purchase of accounts receivable for immediate cash. Factoring gives businesses the power to ensure growth without diluting equity or incurring debt.

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Q: How does it work?

A: Once you have delivered a product or performed a service for an established, creditworthy corporation or institution, contact us before sending the invoice. We will confirm the invoices and arrange funding of up to 75% of the face value of those invoices in cash. When your customer pays us, you will receive the balance less our fee.

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Q: What is a factoring company?

A: A commercial finance company that specializes in the purchase of invoices for cash.

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Q: What types of businesses do you factor?

A: iFactor serves a wide range of industries, including construction, personnel agencies, oil and gas services, printing companies, manufacturers, wholesalers, and many service industries. Most any business that sells a product commercially can use factoring, even those with a negative net worth, are losing money, or in bankruptcy.

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Q: Who can’t qualify for factoring?

A: Companies that have a bank loan secured by its accounts receivable may not qualify for factoring unless the bank agrees to release its lien on the receivables.

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Q: Why would a company sell their receivables?

A: Companies that find cash flow as a recurring problem often can't afford to have cash tied up in receivables 30-45 days or more. They need the cash to meet immediate financial demands of their business.

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Q: Do I need accounts receivable financing?

A: If you are a new business, are having difficulty getting traditional financing, need additional operating capital or would like to solve your cash flow problems, then factoring may be the perfect solution.

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Q: Do I need accounts receivable financing?

A: If you are a new business, are having difficulty getting traditional financing, need additional operating capital or would like to solve your cash flow problems, then factoring may be the perfect solution.

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Q: Is factoring a type of loan?

A: Factoring is not a loan, but is defined as the purchase of a company's receivables versus a loan where receivables are used as collateral.

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Q: Wouldn't a bank loan be easier?

A: Banks often have restrictive lending requirements relating to cash flow, profitability, equity, and years in business which may prohibit them from making loans. Factoring companies are not in the lending business. The decision to purchase invoices is influenced by the quality of your customer base and their performance as opposed to years in business or financial strength.

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Q: If a factor buys my invoices, how do my customers get billed?

A: You prepare your customer's invoice and forward it to your client as well as the factor for purchase. The factor bills the invoice to your customer and follows up on it to ensure receipt of payment.

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Q: How quickly do I get paid?

A: We pay directly upon receipt of the invoice and any required supporting documentation, such as the invoice acknowledgment from the debtor.

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Q: How are the fees for factoring services determined?

A: Fees vary by company and for each client. They are determined by a combination of your customer base creditworthiness, the average payment cycle, invoice size and factoring volume. Industry fees average 3 to 6 % of the invoice amount, and are collected once the invoice is paid by the customer.

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Q: Do I need to sell all of my invoices?

A: No. You decide which invoices you need to sell to manage your cash flow needs.

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Q: What is the difference between factoring invoices on ‘non-recourse’ and factoring invoices ‘with recourse’?

A: When an invoice is factored on a ‘non-recourse’ basis the factor takes the credit risk of the account debtor, thereby protecting the client from credit loss. You get paid regardless of the collection status of the invoice. When an invoice is factored ‘with recourse’ it means that the factor may come back to the client to pay the invoice if the debtor does not.

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Q: What about the location of the client's customers?

A: iFactor can arrange purchase of credit-worthy invoices from anywhere in Canada and the US.

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Q: Are there any other personal or company encumbrances required?

A: Within our traditional factoring programs, a priority position on the accounts receivable is usually all that is encumbered, but additional collateral may be required.

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Q: How long do I have to commit to factoring my invoices?

A: We have an open term, meaning that you can factor as many or as few invoices as you like over any period of time.

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Q: How will I know the status of my factored invoices?

A: Each month we send a detailed Factoring Record which includes the status, dates and fees paid on all invoices.

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Q: How do my customers know where to send payments?

A: When iFactor arranges purchase of an invoice, it is stamped with the correct address before being mailed to the customer. We also provide the appropriate remittance information on our Notice of Assignment.

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Q: How do I receive my money from the factored accounts?

A: iFactor arranges the wiring of funds directly to your account, and in some cases we can deposit the cheque directly at your bank.

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Q: Can I factor my receivables if my company already has a loan or line of credit with a bank?

A: Usually. We have funding sources that can compliment and work with your existing lenders to enable you access to larger amounts of funding.

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Q: What is the minimum amount of invoices I can sell?

A: There are no minimums or maximums to the amount of invoices we can factor.

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Q: Do a company’s customers always know when a company is seeking financing through factoring?

A: Yes, the factor must notify the account debtor to pay the amounts directly.

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Q: What will my customers think?

A: Selling notes, income streams, and receivables has been around for many years, and commonly used by successful corporations all over the world. Your customers will likely conclude that your company is making sound business decisions by obtaining and using money owed to it immediately rather than waiting 30-60 days or more. Having a continual, constant source of interest-free working capital is a major benefit to any active company.

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Q: How do I qualify?

A: We base our credit decision on the strength of your customers, not you. It's easy to qualify if you meet the following criteria: Your customer must be another (creditworthy) business. Your invoice must be a valid one for goods sold and delivered or services rendered...to your customer's satisfaction. We will verify each invoice with your customer.

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Q: How do I get started?

A: Call us at (403) 710-3510 or visit our web site at www.ifactor.info

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