In my last blog with Andrew Aquino, Executive Vice President at Bay View Funding, I mentioned that we would be chatting about the warning signs to look out for with some of the newer financial offerings on the market. Andrew also covered some of the major benefits of accounts receivable financing.
Andrew strongly recommends checking that the term of the loan agreement and the fee structure is clearly disclosed. If it isn’t, he says it should be simple to inquire about it and find out exactly what the loan agreement entails. Some major questions to ask would include:
- What are all the fees?
- How does the loan repayment work?
- Are there any penalties, and if so what are they?
Many of these types of loans involve initially supplying a lump sum, and then collecting money out of your account on a daily basis. The balance in your company account may fluctuate on a daily basis and if a certain dollar amount is pulled and there are insufficient funds, the penalties could be significant. So Andrew recommends understanding the structure of the loan, the standard fees, any additional fees and how the money will be collected.
I asked Andrew his opinion as to why Bay View Funding, and accounts receivable financing is different from other forms of financing, and such a good choice:
"We have been in business for close to 30 years; we have also been a small business. We have worked with thousands of small businesses across the country, and are very familiar with many different types of industries. We provide our financing to just about any type of business you can think of that is selling a product or service."
Most importantly, we understand the pains a small business owner goes through. Wearing multiple hats and juggling all elements of operations can be a challenge. Where factoring is so useful compared to other types of loan or financing is we are not just providing the financing we are providing a full suite of accounts receivable management including:
If a business is performing all these functions themselves, and they choose to factor, they can stop worrying about the financing, focus on sales and not on credit and collections. Credit checks, and a credit profile of existing or potential new clients are supplied as part of the financing service. Our extremely experienced team collects on outstanding invoices in a professional manner, and the service is provided free of charge. We are not a collections agency, we just make sure the invoices are in the system, that they have gone through the approval process and that the customer will be paying close to the terms they have agreed upon
Invoice factoring can provide the answer to working capital management and help business owners concentrate on sales to help the company grow.