Factoring is the process whereby a company sells its accounts receivable to a factor at a discount and receives cash. The factor also typically provides credit management and collection services. For example, a company has $10,000 of sales invoices to factor. The factor advances to the company a certain percentage of the invoice upfront. For this example, let's use 75% so that at the time of purchase $7,500 is sent/advanced to the Company (if you are quoted advances of 90% or greater, make sure that you read the fine print in your contract - there's always a "catch"). This upfront payment is not a loan, but an advance on the purchase of accounts receivable. The factor then collects the invoices and sends the balance of $2,500 less its fees when the invoices are paid. Fees are typically based on how long it takes to collect each invoice.
Benefits- Factoring provides quick liquidity to your business for growth or on-going operations. As a source of funds, factoring is easier than going to a bank for a commercial loan. A bank has many financial requirements that most small businesses do not meet, typically requires a 60-day application and approval process, and provides a limited line of credit. With your cooperation, a factoring arrangement can be reached in days and the amount you can factor is unlimited, based on the credit worthiness of your accounts receivable.
We provide immediate cash for your non-cancelable sales orders so you can fill them and grow your business. Gulfco has simple criteria for funding purchase orders:
* Management Expertise and Proven Products- Gulfco will finance companies with expertise in their field, and products with a proven sales history.
* Dependable Sourcing - Gulfco will fund transactions with suppliers who have proven dependability.
* Valid, Non-cancelable Purchase Orders- Gulfco will fund non-cancelable, valid purchase orders issued by creditworthy companies.
* No Handling of Inventory; Goods must be drop-shipped or stored in a third party warehouse until shipment.
Gulfco will fund by making direct payments to third party suppliers or the posting of Letters of Credit by Gulfco on behalf of its client. Purchase Order Financing is available to virtually all industry segments, with the exception of construction and service industries.
Inventory Funding- Download the Funding Application on the left
We provide immediate cash for your inventory under the following simple criteria: * The maximum advance is liquidation value
* Inventory must reside in a third party, public warehouse
* The minimum gross profit margin on the sale of the product is 25%
* The inventory turns over at least 4 times per year
If you believe you can work within these guidelines, please call us for a professional consultation at 708-446-4416.
For more information on the applications and which ones to use please go to the Applications page.