Factoring

Providing You with the Capital You Need

The number one reason for business failure in the U.S. today is lack of working capital. We can make sure that you are never faced with that problem. Has there ever been a time when your company was short of money even though you were doing a lot of business? Many times the credit terms you offer your customers create a problem when you have your own bills to pay.

How much more efficiently could your business operate if all of your accounts were paid C.O.D.? At Hukill Consulting we are in the business of finding the working capital you need to have your business run at its optimum levels.

A Cash Factor

Converting accounts receivable into cash on hand is quickly becoming one of the preferred ways to provide immediate cash flow for your business. This simple process is called Factoring.

You sell your accounts receivable to an investment company called a factor and receive cash immediately, while the factor collects the invoices owed to you. With factoring, you retain complete control and ownership of your company, and you get the cash you need.

A Profit Tool

A Simple Process

The factoring process is straightforward and uncomplicated. The first step is a basic review of your accounts receivable. After the initial paperwork is completed, we activate our national network of factors, searching for the best possible match. Once approved, most companies receive their cash within 48 hours.

Factoring FAQs

Factoring Vocabulary

Financing Comparison

 

  Leasing Going Public Venture Capital Bank Loan Private Investor Government Programs Factoring
Simple Application No No No No Depends No YES
Days to Fund 15-30 120-270 90-180 60-180 15-90 60-180 3-10
Approval Based on Credit Yes Yes Yes Yes Yes Yes NO
Funding Tied to Sales No No No No No No YES
Give Up Equity No Yes Yes No Yes No NO
Give Up Control No Sometimes Yes No Sometimes Sometimes NO
Limited to Asset Value Yes No No Yes Maybe Yes NO
Require profitability Usually Yes Usually Yes Usually Usually NO
On-going Monitoring No Yes Yes Yes Yes Yes NO
Reduce Overhead No No No No No No YES

 

Factoring Frequently Asked Questions

What is factoring?

Purchasing commercial accounts receivable at a discount. Your company can receive an immediate cash advance against invoices to your customers. You can meet payroll, pay vendors, accept new projects/orders, and pay other bills. We wait up to 90 days for your customers to pay.

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Does factoring make good business sense?

Yes! Thousands of firms use receivables-based financing when cash flow dries up due to slow-paying customers or when traditional financing is either unavailable or insufficient to fund needed growth. Our process is exceptional in its speed, ease and flexibility.

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Can my business afford to factor?

Factoring allows your company to increase sales by improving cash flow. This increase in sales will far outweigh the costs of factoring. Can you afford not to?

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What is required before an invoice is funded?

Your customer must be credit-worthy, and your service completed or product delivered and accepted by your customer.

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How fast will I receive my money?

Fast! Generally, Hukill Consulting can turn your receivables into cash in as little as 24 to 48 hours after receipt of the invoice.

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Who decides which invoices to factor?

You do! One of the great advantages of factoring with Hukill Consulting is that you stay in complete control of your business. You decide what invoices you want to factor and when to factor them.

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What are the advantages and benefits of factoring?

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How much does factoring cost?

Factoring generally cost about the same as if you offered a C.O.D. discount to your customers. But a more important question should be, what will it cost you not to have the needed cash to run your business?

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Factoring Vocabulary

Accounts Payable
The amount of money a company owes for gods and services it has received; any outstanding debt that a company has.
Accounts Receivable
A collection of a company's outstanding invoices (invoices which have not yet been paid by the company's customers).
Accounts Receivable Aging Report
A report showing how long invoices from each customer have been outstanding
Advance Rate
The percentage of the face amount of an invoice that a factor will advance to a client as funding for a factoring transaction.
Articles of Incorporation
A document filed with a US state by the founders of a corporation. After approving the articles, the state issues a Certificate of Incorporation; the two documents together become the Charter of Incorporation
Asset
Anything having commercial or exchange value that is owned by a business, institution or individual.  A business' assets might include its real estate, equipment inventory, intellectual assets such as copyrights or trademarks, and accounts receivable.
Assignee
The person or business entity who is given, obtains, or buys the right to an asset.  In a factoring transaction, the factor becomes the assignee for the accounts receivable.
Assignment
The transfer of the rights, title or interest of any debt instrument that is properly owned by another party.  In a factoring transaction, the right to collect on the issued invoices is transferred form the business to the factor.
Assignor
The person giving or selling an asset, and subsequently, forfeiting rights to that asset.
Authorized Signatory
A person who is empowered to execute a legally binding document on behalf of a corporation, partnership or other entity.
Bad Debt
Any debt or income stream that is delinquent and has been written off as "uncollectible."
Bad Debt Reserve
A reserve of funds held back by a factor when purchasing invoices to offset its losses in the event of non-payment.  Once the reserve reaches a predetermined size sufficient to protect the funding source's investment, part of the reserve is rebated to the client.
Balance Sheet
A financial report that shows what an individual, business or other entity owns (its assets), what it owes (its liabilities) and the amount of its net worth or equity.
Bankruptcy
A state of insolvency of an individual or organization.  The inability to pay debts.
Bill of Lading
A shipping document which gives instructions to the company transporting the goods.
Bill of Sale
A document used to transfer the title of certain goods from seller to buyer.
Client
The client in a factoring relationship is the company that is in need of cash and wants to sell its receivables to the factor.
Collateral
An asset promised to a lender until a loan is repaid.  If the borrower defaults, the lender has the right, by law, to seize the collateral and sell it to pay off the loan.
Commercial Credit Insurance
Insurance against extraordinary losses from the ultimate uncollectibility of accounts receivable.
Concentration
The portion of a client's total accounts receivable due from a single customer.  A customer's account that comprises 50 percent of a client's total receivables is highly "concentrated."
Corporation
A legal entity, chartered by a U.S. state or the federal government, and separate and distinct from the persons who own it.  It is regarded by the courts as an artificial person; it may own property, incur debts, sue or be sued.
Corporation By-Laws
Rules governing the internal management of an organization which, in the case of business corporations, are drawn up at the time of incorporation.
Corporate Resolution
An action taken by vote of the directors of a corporation.
Cost of Goods Sold
The cost of all of the materials needed to make the client's product.
Credit Analysis
A review of the record and financial affairs of an individual or corporation to ascertain creditworthiness.
Creditor
One to whom money is owed from a debtor.
Customer
The client's customers (recipients of the client's products or services) who are responsible for payment of an invoice.  Customers are also referred to as payors or account debtors.
D/B/A
Abbreviation fro "Doing Business As."
Debtor
One who owes something and makes payments to a creditor
Default
The omission or failure to perform or fulfill a legal duty, obligation or promise.
Delivery Evidence
Documentary proof that shipment of goods invoiced as sales has occurred.
Discount (or Discount Rate)
The percentage of the face amount of an invoice that a factor keeps or charges as its fee for factoring and other services.  Also called the factor's fee.
Due Diligence
The process through which brokers and funding sources assess the risk and authenticity of a deal.  It consists of the gathering and verification of information and documentation necessary for the funding source to make an informed decision as to whether to accept a prospect as a client, thereby reducing the funding source's overall risk of loss.
Face Value
The value of a security as stated on the instrument.  Also referred to as "par value" or "nominal value."
Factor
1. (noun) A funding source that purchases accounts receivable, or 2. (verb) to purchase accounts receivable from a client.
Fixed Costs
Costs that remain constant over a wide range of volume.
Fixed Expenses
Overhead; expenses that will not change regardless of sales volume.
Funding
The advance of monies based on the sale of invoices to a factor.
Interest
The rate paid on money that is borrowed, usually stated as percentage rate per year.   (Factoring does not involve charging interest.)
Invoice
An itemized list of goods and/or services sold or delivered to a buyer, including all prices and charges.
Liabilities
Claims on the assets of a company or individual excluding ownership.
Lien
A hold or claim which one person or entity has upon the property of another as security for repayment of a debt.
Notification
A characteristic of factoring, whereby the factor takes assignment of the accounts receivable and notifies the customers of the client to pay the factor directly.
Overhead
The costs of a business that are not directly associated with production or sale of goods or services.  Also called indirect costs, fixed costs or expenses.
Personal Guaranty
A contractual agreement between a funding source and the seller, whereby the seller assumes personal responsibility and liability for the obligations of the income stream payor.
Prepayment Penalty
A penalty for the payment of a debt before it becomes due.
Profit and Loss Statement (P&L)
Summary of the revenues, costs and expenses of a company during an accounting period; also called income statement, operation statement, statement of profit and loss, income and expense statement.
Rebate
The amount of the reserve account that is remitted to the client upon payment of an invoice.
Receivership
A remedy which may be granted by a court of law in an appropriate case, whereby a person is appointed as a receiver to possess, manage and protect money or property until the litigation involving the property is concluded.
Records Search
A review of financing statements or liens on file with the Secretary of State and/or the County Clerk; discloses any existing pledge of a business's accounts receivable, inventory or machinery and equipment.
Reserve Account
The account set up to track funds owed to the client from the collection of factored invoices.  The reserve account balance can be calculated by taking the invoice face value and subtracting the initial advance, the factor's earned fees, and any charge backs and administrative charges.
Right of Set-Off
A A right which exists between two parties, each of whom owes an amount to the other under a separate contract, to set-off (reduce) one party's debt by deducting therefrom the amount owed to that party by the other party.
Schedule of Accounts
A document that is provided to the factor by the client which lists the following information: the date of the client's invoice, account number assigned to the customer by the client, name of the customer to whom the invoice will be sent, invoice number assigned by the client to the customer, amount due for the goods provided to the client, name of the factor, legal name of the client submitting the invoices, total face amount of all the invoices submitted to the factor, and the signature of the person authorized to sign on behalf of and bind the client.
Security Interest
An interest in property, other than real estate, which is given as security for a debt or other obligation.  A security interest is created by execution of a security agreement and one or more financing statements under the Uniform Commercial Code (UCC-1's) which are then placed on record with the Secretary of State and/or with the county recording office where the property is located.
Set-Off
An agreement established between the client and his customer, whereby in certain circumstances the customer may be entitled to deduct a portion of the amount otherwise owed the client; in which case the factor may have advanced sums against an invoice which it is unable to recover directly form the customer.
Term
The period of duration of an invoice, acceptance, time draft, bill of exchange, or bond; synonymous with tenor and usance.  The time allowed for payment of bills.
Trade Discount
A deduction from the list price of goods allowed by a seller in return for payment within a specified time; for example, 2 percent 10/net 30-day terms allows a 2 percent discount from the list price if paid within 10 days.
UCC-1
A document which is placed on record with the Secretary of State or with the County Recording Office.  The purpose of filing this document is to evidence the funding source's security interest in the client's personal property.  This document is filed in the state or county in which the client's business is located.
UCC-2
A document commonly used in the State of California which also is filed with the Secretary of State.  The State of California does not have a UCC-3 document; they call it a UCC-2.
UCC-3
A document which is place don record with the Secretary of State or with the County Recording office to evidence a change in status for a UCC-1.  With respect to cash flow, a UCC-3 (or UCC-2) may be used to evidence assignment or termination of a UCC-1 or to make another applicable change.
Uniform Commercial Code
A federal code recognized by more than 40 states which regulates the transfer of commercial property.  The UCC took the place of various state statutes covering chattel mortgages, conditional sales, trust receipts, etc.
Verification
A procedure used to confirm the validity of assigned accounts receivable; the factor checks directly with the client's customers to verify accounts as due and payable.

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