Factoring
Company Links
Why Factoring is Necessary
Your Factoring
Company Benefits
Comparison of
Factoring to
Traditional
Funding
OCF Factoring Company
- Providing factoring services nationwide
- Over 70 years of factoring company experience
- Up to 97% Advance Rates
Is Factoring For You?
The key to knowing if factoring is for you is to not
to look only at the bottom-line factoring fee, but also to
consider how your company may increase it's profits through factoring.
Here is additional information on factoring
to help you with your decision.
How are fees and advance rates determined?
It is based on several factors:
The creditworthiness of your clients
Your monthly billing volume
Average invoice size
Average days to payment
Fees can range from 2-5 % of the invoice's face value.
For example if the invoice's value is $1,000; a fee of 3% equals $30.
What is an advance?
The amount of money you receive immediately when we
buy your invoice. The balance is returned to you when
your customer pays the invoice.
Advances range from 60-95% of the invoice's face value.
For example if the invoice's value is $1,000 an advance
rate of 80% equals $800. The balance of $200 less the
factoring fee is returned to you when your customer pays the invoice.
Comparing Bank Lending Rates to Factoring?
When compared to bank lending rates, factoring
initially appears to be very expensive. Here are five typical
questions/concerns that are raised by potential factoring clients
- Wow! 3 points per month! That's 36 percent year!
It is tempting to annualize the numbers, but that is an "apples and oranges" comparison.Banks loan money at an annualized interest rate, 12 percent per year for example. We purchase your receivables at a discount. The products are different and there are other inconsistencies to this inappropriate comparison
The bank provides the money only one time, the day that you receive the loan; we provide money continuously. As an example, consider a bank loan for $100,000 at 12 percent. You receive the $100,000 just one time and then pay $1,000 interest per month interest and you still owe the $100,000. Or the bank could provide you with a line of credit that you use only when you need the money but the bank is charging you for that privilege and if you need to increase your line you need to go through the qualifying process all over again.
When you factor $100,000 each month for a year you have the use of $1.2 million (12 x $100,000) over the year. Unlike a bank loan where you have just $100,000 one time. Assuming a 3 point discount, the fees over the year will be 12 x $3,000 or $36,000, which is still 3 percent of $1.2 million. And at the end of the year you have no debt!
- I'm only making 3% profit, how can I pay you 3 points?
A company making only 3% net profit can do more business volume as a result of factoring, and the larger volume will result in a higher profit margin because fixed costs do not increase with volume. The added business at a higher marginal profit leads to an increased overall profit margin. As the volume increases, the cost of production decreases, so that profits increase. Fixed costs i.e., rent, electric, insurance, etc., increase very little or not at all with volume. An increase in business will not affect rent. Electric bills may rise slightly. Workers compensation insurance may rise slightly. These costs do not increase as do direct production costs.
Let's graphically do the math assuming you can double your sales
Without Factoring
Monthly Gross Sales $50,000 Cost of Goods Sold $30,000 60% of Gross Sales Monthly Gross Profit $20,000 40% of Gross Sales Fixed Expenses $10,000 Variable Expenses $8,500 17% of Gross sales Factoring Fee N/A Total Expenses $18,500 37% of Gross Sales Monthly Net Profit $1,500 3% of Gross Sales
With Factoring
Monthly Gross Sales $100,000 Cost of Goods Sold $60,000 60% of Gross Sales Monthly Gross Profit $40,000 40% of Gross Sales Fixed Expenses $10,000 Variable Expenses $17,000 17% of Gross Sales Factoring Fee $3,000 3% Fee Total Expenses $30,000 30% of Gross Sales Monthly Net Profit $10,000 10% of Gross Sales
- But I only get 80% of my money upfront!
Let's assume an advance rate of 80%. Let's also assume that you begin factoring in January. You have factored $100,000, we pay you $80,000 of that money upfront, with the remaining money making up the fee (3%) of $3,000 and the reserve (17%) of $17,000.
Now in February, you once again factor $100,000 and receive $80,000. However. you also receive your January reserve of $17,000(assuming your customer pay in 30 days). So for February, you actually receive 97% of your money, instead of 80%.
In the second month and going forward you are basically receiving 97% of your cash flow.
- But what if my customers take longer than 30 days to pay?
You have several options, Assume your client takes 60 days to pay you bill your client in the normal fashion and simply allow 30 days to go by prior to factoring that invoice. That way you pay the 30 day fee.
Another way is to factor your faster customers first for the cash you need.
To find out how we might structure
a factoring deal for you, please complete our online factoring company application.
To
talk with a member of our sales team,
please contact one of our regional offices at:
Toll Free: 888-266-0197
and ask for Andrea
Fax #: 425-702-1874
Email: andrea@ocf.com
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We are currently factoring accounts receivable nationwide including the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho State, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
What Sets Us Apart
Our program includes the following
features
• Same Day funding on approved
invoices
• We do not require a long term contract.
• 97% advance rates; tops in the industry
• Credit analysis on new
and existing customers
• Continuous collection management and
follow up on
factored invoices
• Invoice and statement mailing (postage included)
•
Account status inquiries anytime;
24/7 online account access.
Our flexibility allows you to maintain control:
• You select accounts you prefer to
factor
on an invoice by invoice basis.
• You control total factoring costs by only
, factoring on an "as needed" basis.
Up
to 97% Advance Rates:
Advance rates are based on overall risk
associated with a particular industry as
well as experience and track record.
We
hold reserve accounts to accommodate
industries which typically experience
dilution
and that we would otherwise not be able
to service. Advance rates range
from
80% to 97% of the gross invoice amount.
Fee
Structures:
Fees are determined based on your
industry,
the credit worthiness of your customers,
how quickly your invoices
turn, and
monthly factoring volume.
OCF provides individualized customer
service,
by tailoring our flexible programs to fit the individual
needs of each
of our clients. We strive to
be responsive, handling receivables
with speed,
efficiency, and a personal touch.
As a client you are assigned one account
administrator who will personally handle
all of your account activity and
inquiries.
This gives us the ability to buy your r
eceivables and get the money
to
you within 12 to 24 hours.
Having one person look after your account
also
makes it easy for you to decide
which invoices you are going to sell and
when
you want to sell those invoices.
Our funding is
primarily done by
direct deposit or wire.
OCF has more than 70 years of
successful
cash flow and credit management experience,
experience we would love
to put to work for you.
To talk with a member of our sales team,
please contact one of our regional offices at:
Toll Free: 888-266-0197
Fax #: 425-702-1874
On-Line Factoring
Request Form
Email Us
Our Factoring Programs Can Help You Double
Your Sales
Let Us Show You How
To talk with a member of
our sales team,
please contact one of our regional
offices at:
Toll
Free: 888-266-0197
On-Line Factoring
Request Form
Email Us
