how does far west capital fund your business?
Or: What’s factoring, and should you use it?
are you…
…invoicing your customers and clients?
…often waiting on customers to pay outstanding invoices?
…trying to make your payroll match your incoming revenue?
… suffering from seasonal cash flow challenges?
… making a product, and need to finance a large purchase order?
If you answered “yes” to all or most of the above, factoring – also known as “accounts receivable financing” is probably for you.
here’s how it works.
![icon-9 icon-9](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-9.jpg)
You provide a service or product to your client.
![icon-10 icon-10](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-10.jpg)
You’ll invoice your customer as usual, and send us a copy.
![icon-11 icon-11](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-11.jpg)
Instead of paying you directly, your client sends the amount owed to our team for processing – but that may take 30 days or more.
![icon-12 icon-12](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-12.jpg)
Instead of waiting for your client to pay, we send you cash the day you submit your invoice (minus a small fee) via direct deposit to your bank account.
With cash on hand, our clients can then…
![icon-17 icon-17](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-17.png)
but is it worth it?
One client of ours needed to make more briefcases.
They’d sold a big order, and they needed $1,000,000
to buy more materials to make lots more briefcases.
to buy more materials to make lots more briefcases.
They could…
1. Find an investor and sell 25% of their equity
2. Come to us with their sold purchase orders
1. Find an investor and sell 25% of their equity
2. Come to us with their sold purchase orders
With $1,000,000 funded against their existing purchase orders,
they were able to grow to an annual revenue of
they were able to grow to an annual revenue of
$5,000,000.
![icon-18 icon-18](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-18.png)
What else should I know about factoring?
![icon-19 icon-19](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-19.png)
It’s not a loan.
Instead, factoring simply purchases your receivables at a small discount. You’ll never be put in a situation where you can’t pay off debt.
![icon-19 icon-19](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-19.png)
It works best in a long-term relationship.
Beware of “easy money” – if you’re considering factoring, it helps to have a partner who understands your long term goals, your history, and your growth needs.
![icon-19 icon-19](https://www.farwestcapital.com/wp-content/uploads/2017/04/icon-19.png)