Is Factoring accounts receivable a new financial option?
Not at all. Factoring is one of the world's oldest forms of financing. It has been in use for over 4000 years in a variety of forms. In the U.S., at least until the mid-1980s, many people thought that this form of financing was exclusive only to the textile and garment industries. TRANSFAC has been factoring accounts receivable for a wide variety of industries since 1942.
Is Factoring from TRANSFAC Financial Services different from financing from a bank?
TRANSFAC focuses on the credit worthiness of your customers when making funding decisions. Banks will focus on your company's financial history and cash flow. Additionally, since Factoring is not a loan; there is less debt on your company's balance sheet. TRANSFAC is able to make quick funding decisions, banks may take weeks or months to approve a loan.
Will my company be eligible if it currently has a bank loan or bank line of credit?
If a bank has a lien on your company's accounts receivable, we will ask the bank to subordinate that lien in favor of TRANSFAC. Whether this is possible depends on the policy of the individual bank in question. Alternately, we may be able to arrange to pay down or pay out the loan from your funding.
What if we just opened our business?
As long as you are selling goods and/or providing services to reputable companies, TRANSFAC will finance the invoice, even if it is the first order your company has delivered.
My company has an outstanding tax bill. Can I still apply for Funding?
Yes, tax problems vary in complexity and are handled on a case by case basis. In many situations we have worked with the IRS so that you may both receive funding and satisfy their needs.
Will TRANSFAC purchase accounts receivable from a client in bankruptcy? Yes, also known as debtor-in-possession financing, chapter 11 financing is a method for companies to obtain working capital while going through reorganization. Factoring accounts receivable can be utilized to fund within the confirmation plan and help to exit the bankruptcy.
How much of my company's accounts receivable can be funded?
TRANSFAC can purchase up to 100% of your company's creditworthy accounts receivable.
Must I submit all of my invoices to TRANSFAC? No, you choose which accounts receivable you want to factor. Once an account is chosen and approved, we will need to factor all the invoices of that company to eliminate any confusion as to where the payment should be sent.
How long will it take to receive first funding?
Initial funding normally takes from 5-10 business days after we receive your signed factoring agreement. Naturally, the time frame is dictated by how fast you supply TRANSFAC with the information necessary for us to proceed. After the initial funding your company will receive funding within 24 hours of our receiving your submitted invoices. Same day funding is also available to you.
Will TRANSFAC fund invoices sent out before starting with us?
Yes, a client just starting with us does not have to wait for new business to begin funding. It is their option to be funded on invoices already outstanding. Typically TRANSFAC will fund these creditworthy invoices up to 60 days old.
Will TRANSFAC verify invoices with my customers?
Invoice verification is an essential and accepted part of the factoring process. With verification, TRANSFAC can tell our clients in a timely manner if there is a customer service problem. A non-factoring client may not notice such problems until the invoice becomes past due and by that time it may be too late to save the account. So that the process will run smoothly, TRANSFAC will send a customer an initial notification letter, on your letterhead, as well as contacting your customers from time to time by telephone.
Who collects from my customer?
TRANSFAC takes this responsibility. We are very courteous and professional in our approach and our history indicates that we care about maintaining good relationships with your customers.
What will my customers think about my factoring?
We often get this question. We have found that many of our clients' own customers use factoring financial services as it is a widely accepted form of financing. With factoring accounts receivable, clients are actually in a much stronger financial position as they now have a finance company standing behind them with available cash when they need it. With factoring, your customers give you the business, knowing in advance that you have the funds available to complete the task.
What should I do if a customer mistakenly sends the payment to my company? This might happen, particularly during the initial funding process. If this should occur, the check must be forwarded to TRANSFAC at once.
What happens if my customer doesn't pay the invoice?
This event is minimized up front through our free credit analysis and verification process. If this should occur, your company would have to reimburse TRANSFAC, normally by having it deducted from the next advance. With our accounts receivable management program that invoice continues to be monitored and collection efforts made. When that invoice is paid the funds are rebated to you. If an invoice is seriously delinquent and you choose to more aggressively pursue payment, TRANSFAC can provide additional help. Please see Delinquent Accounts
How can I be sure that TRANSFAC will treat my customers well?
The last thing we want is for you to lose a customer. TRANSFAC will not harass your customers for money. Maintaining customer good will and confidence is as important to us as it is to you. We know we are on the right track, as we like to brag that we have many clients who stay with us for decades.