Although the terms “asset-based lending” and “factoring” are often used interchangeably when discussing accounts receivable financing, there are important differences that business owners should be aware of when evaluating alternative financing solutions.
1. Asset-Based Lending Allows You to Maintain Ownership of Your Business
The biggest difference between factoring and asset-based lending is that a factoring company actually buys your invoices at a discount – while our financing does not. Allied’s working capital solutions allow you to maintain ownership of your invoices and simply borrow against them.
2. Our Business Financing Solutions are More Discreet
Because the factoring company owns your invoices, they will contact your customer. Assuming that the invoice has not been paid by the due date, your customer can expect a follow up call inquiring about when payment will be made. In addition, factoring companies generally require that your customer make checks payable directly to them.
Why would anyone want to allow a third party to contact their customers when other options are available? When you open a working capital line of credit with Allied Financial Corporation, we are not contacting your customer, and your customer does not know of our involvement. You handle the collections of your own receivables and retain the important relationship that you have worked so hard to develop with your customers.
3. A/R Financing is Faster and Less Expensive
Often times, a factoring company will not advance until they have spoken to your customer and have confirmed that the goods or services have been received, the invoice is valid, and that it will be paid on time. Because the invoice must first be confirmed, it can take days or weeks before you get your money!
Another issue to consider is the fact that factoring companies often require their borrowers to run every single invoice thru their factoring program. That means that you “borrow” the money whether you need it or not. Not only that, factoring companies generally start the meter from the date of the invoice – despite the fact that it can take days for you to get your money. Consequently, you are paying higher financing costs. Finally, factoring companies hold “reserves” which is basically your money that they hold only to “lend” back to you – but not at Allied.
At Allied Financial Corporation, we provide great flexibility to our clients. Our clients borrow when they need to, and don’t borrow when they don’t need the funds. It’s that simple! In addition, interest and fees do not start accruing until the day you borrow the money. Plus, we never hold reserves. This flexibility allows our clients to borrow against older invoices and thus lowers the cost of borrowing.
Learn More About Working Capital Lines of Credit from Allied Financial Corporation
At Allied Financial Corporation, we pride ourselves on providing business financing with transparent terms, accurate information, and superior customer service. Your money works harder and faster for you with a line of credit from Allied Financial Corporation!
If your company is considering accounts receivable financing, contact Allied Financial Corporation for a free consultation. We will take the time to get to know you and your business. If we feel that our program is a good match for your company, we will provide you with a verbal proposal at our first meeting and will follow up with a written proposal within 24 hours. Learn more about our Express Funding Approval Program and fill out our online contact form to get started.