Tag Archives: UCC

5 Tips For A Factoring Application

Businesses monitor the cash flow demands on a regular basis. Nowadays, they use the invoice factoring, especially when they don’t want to get loans from banks. If you own a business and you want to submit a factoring application, consider the 5 tips given below before you go ahead and submit your application.

1. The Factoring Application

First of all, you need to get in touch with the factoring company so that they get to know more about your business. You can also talk to the company on the phone. The information you will provide is given below:

· The name of your company

· Business type

· Information about your valued customers

· Your contact information

The acceptance of your application depends largely upon the type of your business and customers. Most factoring companies prefer invoices owed by trusted businesses. Individual consumers are not that important in their eyes.

2. Aging Reports

In the aging report, details for the initial application are included. The report mentions the amount that the customers owe and the time they will take to make payment. Usually, customers that make payment within 30 days are considered better than those who take more time.

3. The Process of Factoring

The buying of accounts receivable at a good ratio of discount is called factoring. The factoring provider offers an upfront payment on invoices that are approved. The factor takes care of the collection process and then releases the balance as soon as the invoice is paid by the customer. The fee is deducted by the factor before the balance is released.

4. The Cost of Factoring

So, how much will the factoring cost? This is a common question. The cost depends upon the industry, customer strength and the time it takes for the payment to be received.

The pricing is also affected by the value of invoices. The rates will be better if the volume is higher.

5. The Underwriting Process

The factor is interested in your customers’ strength because they are going to buy the account receivable instead of putting together a plan. Moreover, the factor will conduct an evaluation of the creditworthiness of each customer.

Aside from this, the factor will look at the public records of the company to verify the titles. This search involves liens, judgments, corporate status, pending litigation, UCC, criminal records, back taxes and so on. It also includes other items that may affect the process of receiving payments.

On average, the process of due diligence may take 5 to 10 days on fresh accounts. As soon as the starting review process is finished, the approved customers can receive cash within 24 hours. So, the process is not as complicated as most people think and the cash can be received easily.

Factoring offers cash flow solutions for old and new businesses. And they can offer funds for expansion, growth, and expenses.

So, this was a brief introduction to the process of factoring. Hopefully, you can take the right steps now.

Article Source: http://EzineArticles.com/9610716

5 Factors That Affect Your Business Credit

What makes up your business credit score? What gives you the best chances of getting a loan? Here are a few factors that play into your business credit picture, and what you can do to make the most of them:

1. Payment History – Your payment history is an important part of your business credit profile, and is what your D&B Paydex score is based on. Many credit opportunities come with a minimum Paydex requirement. What you can do: always pay vendors EARLY. On time is “okay”, but paying early (as in before you receive the invoice) is best.

2. Credit Applications – Believe it or not, multiple applications for credit can be a red flag that will keep you from getting approved for a loan. Too many in a short period of time will make your company look desperate and be a sign to potential lenders that things are going downhill. What you can do: plan your use of credit accordingly, and keep applications to the minimum necessary to accomplish your goals.

3. Blanket UCC Filings – One thing that many people don’t realize is that they need to pay attention to the order in which they get certain types of loans, and what UCC filings the lenders will file. Some lenders may file a “blanket” UCC filing, which essentially says they have an interest in ALL of your assets. These blanket UCC filings will then take precedence over any subsequent ones, which drastically reduces your ability to get credit elsewhere. What you can do: plan your credit carefully, and negotiate UCC filings according to what your needs are. For example, if you need particular assets excluded from a UCC filing to use as security for another loan, explain that fact in advance to get those items excluded from any blanket filings, or, alternatively, get the loan or account with the more specific UCC filing first. Some experts recommend opening accounts with competing UCC filings at the same time, and negotiating the details with each party simultaneously.

4. Company Financials – With D&B, it’s important to make sure your financials in your credit file are up to date. If they are not, it could negatively reflect on your company when the lender is comparing the available data. What you can do: update your financials on your credit reports so that they reflect your current circumstances, and plan to do so periodically.

5. Company Legal Structure – The legal structure of your company (LLC versus INC versus Partnership, etc.) can also affect your business credit. Lenders are less likely to loan money to Sole Proprietorship’s and Partnerships than Corporations or Limited Liability Companies. What you can do: if you aren’t incorporated, you should be. The advantages span far past just your ability to get credit.

There are other factors that affect your ability to get credit, such as the amount of debt you already have, how heavily invested you are in your company, and even your personal credit can play a role in your approval or denial. Here we’ve covered five of them. In the end, the better the all-around picture you can paint, the better your chances of getting approved for loans will be.

Article Source: http://EzineArticles.com/9493361