No. Even though invoice factoring is commonly referred to as " factoring loans",
it is a financial practice involving a B2B transaction, but no bank.
To further explain, account factoring, it is when a company, like Peacock Capital,
purchases your accounts receivable invoices at a discount and provides you with
immediate cash. A traditional bank loan uses your company's accounts receivable as
collateral, where account receivables factoring looks primarily at the financial
soundness of your customers, not your company. Banks are regulated heavily; large
finance companies generally are public and driven by pressures in the financial
markets. When times are tough, banks and finance companies limit lending. A small
business, too new to have a track record, with a weak balance sheet, with a history
of financial problems, in turnaround mode or undergoing big changes, often cannot
find a willing lender at any price. That is why factoring is best for small to mid-sized
businesses.
Does a bank loan make more sense for my small business than invoice factoring?
No. Banks often have restrictive lending requirements relating to cash flow,
profitability, equity, and years in business, which prohibit them from making
loans to small to mid-sized businesses. Since factoring companies are not
in the lending business and there is really no such thing as " factoring loans",
the decision to purchase invoices is influenced primarily by the quality of your
customer base and their financial stability, and not the financial fundamentals
of your company.
Do I have to jump through the same hoops for account receivables Factoring as with
bank financing?
No. All Peacock Capital needs to produce a proposal is a completed pre-approval
form, summary of accounts receivable aging, summary accounts payable
aging and some other basic financial information.
Do I have to be an established business operating a minimum number of years to
start an account factoring relationship with Peacock Capital?
No. Peacock Capital prides itself on working with companies in all stages of
business, including recently developed small to mid-size businesses. Even pure
start-ups are usually not a problem for Peacock Capital. If your company has
verifiable invoices and creditworthy customers, Peacock Capital will happily speak
with you about an account receivables factoring relationship.
Are my receivables held as collateral while my company is factoring?
Yes. Peacock Capital requires a first position on all accounts receivable while you
are factoring with us.
Does Peacock Capital require additional collateral when my company is factoring?
No. Within our traditional account factoring programs, a first position on accounts
receivable is all that Peacock Capital requires while you are factoring. In some
situations, Peacock Capital may take an available security interest in other
company's assets.
Afra AmirSanjari is the Principal for Peacock Capital. Peacock Capital specializes in
solving the cash flow challenges of Small/Medium Businesses, Government Vendors
and Individuals with innovative financial solutions by providing a network for
securing operating capital.
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