If you’ve recently discovered factoring as an alternative form of business financing it’s common to have a few questions. Here are some of our most frequently asked factoring questions. If you don’t see your question here, or if you require clarification, please don’t hesitate to contact The EBF Group.
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Q: How does factoring compare to bank financing?
A: Banks will primarily look at your historical financial statements and the security you can offer when determining their decisions to offer credit. However, EBF’s funding is based on your accounts receivable and your customers credit worthiness.
Q: Do you charge a monthly fee, like the banks do?
A: No. While banks may charge monthly fees, facility fees, or audit fees, EBF only charges a one-time due diligence fee when the account is opened, and a discount charged when an invoice is factored.
Q: How long does it take to receive funding?
A: Once EBF receives your application and required documentation, a funding commitment is made within 24 hours. In most cases, accounts are opened in four to seven business days. Once the account is opened you can send invoices and EBF can fund your invoices on the same day.
Q: Is factoring an option that is available to businesses with weak credit?
A: The credit decision for factoring is primarily based on the strength of your customers. What this means is that clients with weak credit can take advantage of factoring as a financing option. In most cases EBF will advance 75-90% of the value of your accounts receivable.
Q: How can my company qualify for Purchase Order Financing?
A: Purchase order financing is not available for new product lines or first time customers. You must have experience with the product and a sales history with the customer. There must be a legally binding purchase order in place with acceptable terms of payment. Additional security may also be required.
Q: Is there a limit to the amount we can hope to receive?
A: As a mid-size factor, EBF can accommodate clients that require between $20,000 and $10 million per month.
Q: How does EBF compare to a typical factoring company
A: This is possibly our most frequently asked factoring question. The main difference between EBF and other lenders is the fact that EBF allows clients to manage their own receivables without the fear of being harassed by a third party.