Factoring FAQs
Factoring
Factoring FAQs
- What kinds of companies use Factoring?
- Does my company qualify for Factoring?
- Does Factoring increase my debt/liabilities?
- How long does it take for me to get paid for my invoices?
- How much does REI Financial charge for its services?
- Will Factoring affect my relationship with my customers?
- What happens if my customer does not pay an invoice?
What kinds of companies use Factoring?
Factoring can be used by almost any company which issues payment invoices instead of receiving
immediate cash for the products which its sells. When companies want to expand their operations or
keep a current level of production without having to sacrifice another area of the business, they need
cash. However, cash is often tied down as accounts receivable (Invoices) and cannot be used
immediately. Selling Invoices (factoring) provides a quick and easy way of receiving cash.
Does my company qualify for Factoring?
If your company gives sales terms, is growing in sales/production, could use cash, or is a young
company, it could qualify for factoring. Specific information is given on a per company basis. To find if
your company can employ factoring, you must fill out a small
Does Factoring increase my Debt/Liabilities?
No. Factoring is a service which is accounted for as an operating expense instead of a debt.
Engaging in Factoring will not hurt your credit history or increase your liabilities.
How long does it take for me to get paid for my invoices?
Once your clients have been approved, cash disbursements will be made as soon REI Financial receives your invoices.
How much does REI Financial charge for its services?
Fees vary depending on the variety of and credit-worthiness of clients a company has, on the value of each Invoice, and the duration of each Invoice’s terms. See fee details.
Will Factoring affect my relationship with my customers?
No, you will continue doing business with your customers as usual. The only thing that will change is that the checks for the invoices which ILG has purchased will go to REI Financial instead of to your company. We will notify your clients that you have hired REI Financial as a financial servicing company and that checks should be made to REI Financial instead of your company. Other than that, nothing will change and the relationship/image which your company maintains with your clients will be untouched.
What happens if my customer does not pay an invoice?
ILG offers two kinds of lines of credit. One line of credit (non-recourse) employs a system in which risk falls on ILG. Under a non-recourse line of credit the risk (and cost) of a client defaulting falls on REI Financial. The other line of credit (recourse) employs a system in which ILG’s clients carry the risk of default. Under a recourse line of credit, REI Financial’s client would be responsible for the amount owed on the invoice.