1. What is factoring?
2. Why factor?
3. How does a typical factoring scenario work?
4. How do I get started?
5. Is there a account setup fee?
6. Is there a monthly charge?
7. What about an existing loan?
8. What about an existing line-of-credit?
9. Is factoring the same as a loan?
9. Why factor instead of borrowing from a bank?


What is factoring?
Factoring is the sale of your accounts receivables or invoices to a funding source or investor at a discount price in return for immediate cash. The funding source is known as a factor. Factoring is not a loan, line-of-credit, or other debt-producing service, nor does it require inventory or other company assets as collateral. Accounts receivables are the only vehicle used during the transaction.
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Why factor?
Factoring allows a company to leverage its assets, in the form of accounts receivables or invoices, for immediate cash during growth and/or survival periods. It provides the company with immediate cash when it is needed most without having to pursue a loan, line-of-credit, or collateralizing inventory or other assets in a way that might restrict your business.

Furthermore, you, as a company, and your employees will no longer need to dedicate time to collecting and processing payments on the invoices you choose to submit. The factor assumes control of this process, including debt collection and credit administration. This factoring benefit will free your employees to concentrate on other areas of concern, as they will no longer spend hours sending invoices, depositing checks, logging payments, producing reports, and handling payor requests. This burden will now rest solely on the shoulders of the factor for the accounts receivables you submit. How much do you currently spend managing these operations?
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How does a typical factoring scenario work?
In a typical factoring situation, once an invoice has been submitted, you will immediately receive 70% to 95% of the invoice value in the form of a wire-transfer, direct deposit, or other method. When that invoice is paid in full by the payor, the remaining percentage minus the factoring fee is dispersed to your account.
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How do I get started?
You must complete and submit to Universal Financial Solutions an Application for Commercial Accounts Receivable Funding. You may download the form from our website or complete the online form. If you choose to download a hardcopy, please fax or mail it to us according to the information in the contact section of this website. The application is then reviewed by our account managers. Once reviewal begins, you will be contacted so that we may introduce ourselves to you and ask any questions that we encounter regarding the application. If approved, UFS will request a few more documents from you that will begin solidifying your account with us.
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Is there a account setup fee or monthly charge?
No, your account setup is absolutely free of charge, and there are no monthly maintenance or other retaining fees once your account is established.
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Can we factor if I or my company has an existing loan or line-of-credit with a bank or other financial institution?
Yes. However, you must inform UFS of any and all current loans and lines-of-credit. This allows us to consider the liens involved in your company's reviewal process. If a bank has a lien against your accounts receivables, the factor will ask the bank to subordinate that lien in favor of themselves. Although this is a common occurence and most bank will accomodate the request, it is important to disclose such information at the time of account registration.
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Is factoring the same as a loan?
Absolutely not. Factoring is not a loan. Factoring does not create debt, nor does it require any amount of debt repayment. Furthermore, contrary to the typical reprecussions of receiving a loan, there is no compromise to your balance sheet, no long-term agreements, or delays in receiving cash. Simply put, factoring allows you to obtain the cash that is held by your receivables for the needs of your business today.
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Why factor instead of borrowing from a bank?
Factoring requires no collateral to receive funding. As you are probably familiar, the vast majority of lending institutions, if not all, require company assets, including inventory, operations hardware, etc, before approving and funding their loans. This process and loan contract demands a significant amount of time to procure and restricts your company's operational flexibility. Likewise, the lien created by the loan ultimately restricts your company from pursuing future capital if the time were to arise. On the other hand, factoring creates instant cash from your receivables without requiring a loan, pledging assets, or extensive paperwork.
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