Add Accounts Receivable Financing Agreement Mark with airSlate SignNow

Add Accounts Receivable Financing Agreement digital sign

did a little bit deeper into the presentation just to start what is factoring in its simplest terms what factoring is is the sale of a company's accounts receivable in order to obtain working capital there's lots of types of factoring out there what verse and provides is called non-recourse full notification factoring what that means is the account debtors which is another term for the customers of our clients they are notified to pay versus directly rather than paying their supplier and we take on the credit risk we take on the risk of non-payment from that customer so your client is getting a form of credit insurance by factoring their receivables my background is SBA lending so I'm very familiar with to the terminology of lending the last bunch of years I've been doing factoring if I'm this is a good translation sin of many people on this call might be more familiar with loans than with factoring so sort of the comparable term to loan in the factoring world is a factoring facility we don't talk about loan amounts because there's news we're not making loans we're buying assets particularly the receivable we talk about factoring volume there's no lender we have a factor or the purchaser receivables that's verse in funding in this case the instead of a borrower we have a client or the seller of receivables which is usually your client that's coming to us for funding there's a seven note or loan agreement we have a purchase and sale agreement making it very clear that what we're doing is we're buying assets from our clients are buying accounts receivable from them there's no interest rate and that's a telltale sign than somebody talking about factoring maybe just have a good handle on how it works they start asking about interest rate there's no interest rate because there's no loan there's a Oh you I'm sorry I might even have just lost moment but guess you've seen this chart that you've got a good feel for how the two different terminologies compare our client profile we are looking to fund small to medium sized companies with revenue anywhere from a million to one hundred million we've got a few that a little smaller we've got to several that'll play a bit larger than that but that's our target our average client probably has about five to ten million in annual revenue and what they all haven't caught in common is that these businesses crave liquidity they need cash they just can't wait the 30 60 90 days to get paid by their customers and what we do is we provide them that quick cash though the day they issue an invoice they day they complete a sale we're providing them valuable cash against those receivables if a client is coming to us for factoring chances are they've been a stout of divisional funding markets and that can be for any number of reasons it could be that it's brand new company doesn't have a track record yet done in history that banks like to see before they lend to a company maybe there's growing rapidly that's deep growth curve can can spook a lot of banks they're just not interested in working with a company that's growing too fast or maybe revenues are erratic it's a seasonal business and revenues and profits go up and down a lot of our clients the reason they're not bankable is because they're in some form of distress revenues might be turning down they might be experiencing losses maybe they're in the process