Specialty Finance can be defined as financing activity that takes place outside of the Traditional Banking System such as Factoring.
Receivables Factoring, is when a company buys a debt or invoice from another company.
Invoice Factoring turns business invoices into an immediate legal Line of cash when a business really needs Fast Cash/ More Money.
Invoice Factoring is a widely used method which alleviates the waiting period companies experience after they have invoiced their customers.
The major benefit to factoring is that as the business owner you can get instant access to funds that you’ve already earned, which enables you to put the capital that you receive to good use towards your business in ways that can make your company grow.
Factoring is a financial transaction and a type of Debtor Finance in which a business the client sells its accounts receivable it’s invoice to a third party known as the Factor at a determined discount.
A business will sometimes factor its receivable assets to meet its immediate cash needs.
Factoring is an established method used by exporters to help accelerate their cash flow. The process enables the exporter to draw up to 80% of the sales invoice’s value at the point of delivery of the goods.
Forfaiting is a factoring arrangement used in International Trade Finance by exporters who decide to sell their accounts receivables to a Forfaiter.
Factoring is referred to as Accounts-Receivable Factoring, Invoice Factoring or Accounts- Receivable Financing.
Accounts-Receivable Financing is a term used to describe a form of Asset-Based Lending against accounts receivable.
SECA Funding Company is a leading source for Asset-Based Lending and Factoring within the Specialty Finance Industry in North America.
Factoring is sometimes seen as the premium form of invoice discounting.
In this purchase, accounts receivable are discounted in order to allow the buyer the Factor to make a profit upon the settlement of the debt. Factoring therefore transfers the ownership of those accounts to another party the Factor that then collects the debt.
Factoring therefore relieves the first party the client of a debt for less than the total amount thus providing them with the working capital they need to continue operating their business.
The Factor, collects the debt for the full amount and profits when it is paid. The Factor is required to pay additional fees, a small percentage, once the debt has been settled.
The Factor may also offer a discount to the indebted party in order to make the deal work.
Early Stage Factoring exists to support the growth of young companies when financing tools are not available.
All companies with opportunities for growth will find that factoring is the most valuable tool which provides the funds which they most need in order to build their businesses and expand their customer base.
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