Factors of Puget Sound is a locally owned and operated factoring company specializing in the financing needs of small to medium size businesses. We offer solutions – not obstacles.

About Ud

About Ud

Our Programs

Factoring


What will factoring cost me?

Factoring fees and advance amounts are established by a combination of the following:

  1. Monthly factored volume
  2. Your customer’s credit worthiness
  3. Invoice size
  4. Average payment cycle
The submission of a simple application along with an A/R aging report and financial statements will allow us to prepare a proposal for your company detailing the factoring fees and the advance rate. We can turn around a proposal usually within 24 hours.

Factors of Puget Sound does not have any hidden fees. All fees are discussed and disclosed upfront so you can understand the total cost of factoring. Besides the factoring fee, the client is charged a nominal fee for electronic deposits and wire transfer transactions. There is no charge for direct deposits made to major banks.

Why consider factoring?

A company wants the ability to grow sales without being limited by a lack of working capital.

A company is profitable but is occasionally short of cash.

A company has too much of money tied up in 30, 45, 60 day terms to customers.

Would your business benefit from a "credit line" based on your receivables (and no other collateral) which you could draw upon when needed? Imagine the only limit to capital is your ability to sell!

Now companies can have access to working capital they need for growth.

What is Factoring?

Accounts Receivable funding (Factoring) is designed for businesses that want to improve their cash flow by not waiting 30, 60, 90 days for a customer to pay. Factoring is used in almost every industry today that sells business-to-business or business-to-government.

Factoring is not a loan and differs from a line of credit because invoices are advanced upon at the time the invoice is created. It's the same concept as offering a discount for early payment of your invoice (1% 10, Net 30 days), only now you get the money the same day you invoice, and it doesn't depend on if your client wants to pay early.

New businesses and fast growing companies have a huge demand for cash. Chances are their sales are growing faster than they can collect from their customers. Factors of Puget Sound offers the solution for cash flow.

Example of Factoring

The following cost justification illustrates the benefits of a factoring situation involving a company that has progressed beyond the break-even level, but lacks funds to take advantage of additional sales opportunities. Assume the company has annual sales volume of $600,000, an average level of inventory of $100,000 turning over six times per year, accounts receivable of $100,000 and a gross profit percentage of 40%. With factoring, assuming a 75% advance rate, $75,000 previously tied up in accounts receivable can now be allocated to inventory and other working capital needs. If the company were to increase its inventory by 50,000, this would result in an increase in sales of $300,000 per year at a turn of six times. A 40% gross profit would generate and additional $120,000 in gross margin dollars. Assuming a 3% factoring fee. Factoring costs would be approximately 18,000 per year ($50,000 per month at 3% for 12 months). Assuming additional variable expense of 10% or $30,000 incremental pre tax earnings would be approximately 72,000, a 24% return on gross sales.


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