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Q: |
Why factor? |
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A: |
Factoring
can accomplish a number of desirable results, the most basic
being improved cash flow. Strong cash flow can enhance the
growth of your business, making it possible to expand without
the need of taking on debt or bringing in outside equity. |
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Q: |
What
does stronger cash flow do for me? |
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A: |
Stronger
cash flow enables businesses to take advantage of supplier's
discounts, meet payroll, satisfy operating overhead and
establish good credit for future expansion. These advantages
explain why factoring has become, in recent years, a valuable
tool for businesses of all sizes and in most industries. |
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Q: |
What
form of factoring does Creative Capital perform? |
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A: |
Although
we are primarily a spot factor, we perform both spot and traditional factoring. |
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Q: |
What
is the difference between spot factoring and traditional factoring? |
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A: |
With
spot factoring there are no long-term contracts and no minimum
or maximum. The client chooses when to factor, how much to
factor and which invoices to factor. It is a flexible service.
In traditional factoring, the client is required to factor an
agreed upon minimum amount of accounts for a minimum period of
twelve months. The fee is based upon volume but is generally
less than that of spot factoring. |
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Q: |
What
is the difference between recourse and non-recourse factoring? And which does Creative Capital do? |
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A: |
If
an account fails to pay within a specified period, usually 60
days, a recourse factor returns the invoice to you and you
either replace it with another of comparable value or
reimburse the advance and fees to the factor. A non-recourse
factor owns the receivable outright, without recourse to the
client. Creative Capital is a non-recourse factor. |
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Q: |
Will
my customers believe that I am experiencing financial
difficulty if they find out I am using a factor? |
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A: |
No.
If handled in a discreet and professional manner, it appears
as if the factoring company is an arm of your organization.
Most informed business professionals today are aware that
factoring is a common financial tool used successfully by
companies of all sizes. |
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Q: |
If
my customers know that their invoices are factored, won't they
take longer to pay? |
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A: |
No.
Often just the opposite is true. If your customer is a large
corporation with its own policy specifying when to pay
invoices, it makes no difference who the creditor is. They
will adhere to what their policy dictates. If your customer is
a smaller or closely managed company, they may be inclined to
pay faster because they may know that a factor is a prime
reporter of credit and an influential reference. |
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