Payroll funding provides cash flow for temporary staffing agencies.

Payroll Funding

Payroll funding is the regular process or cycle of billing your customers, paying your employees and getting funded by a factoring company. It’s most often used by staffing companies that are in early-stage or growth-stage business cycles. Since there are about 20,000 staffing and recruiting companies in the U.S., payroll funding is very common. Staffing …

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Freight Factoring

Trucking companies all over the U.S. and Canada rely on freight factoring to generate the cash flow necessary to operate their businesses. Freight factoring companies provide immediate funds for freight bills and invoices, so you don’t have to wait 30, 45 or 60 days for your customers to pay. Trucking companies often work with a …

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Federal Assignment of Claims Act

The Federal Assignment of Claims Act (FACA) offers protections and benefits to factoring companies that provide government contract factoring services. For assigned government contract payments, a factoring company must file a UCC-1 financing statement under Article 9 of the UCC in order to perfect its security interest, just like any other accounts receivable. However, a factoring …

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Bidding for Government Contracts

Requirements and qualifications Small businesses looking to bid for government contracts must know their North American Industry Classification System (NAICS) code and register with the following: Dun & Bradstreet (DUNS) System for Award Management (SAM) Small Business Administration (SBA) You’ll need to know your primary NAICS code and possibly multiple NAICS codes for the products …

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Government Contract Financing

Government agencies often take 30 days or more to pay their invoices, so government contractors turn to government contract financing for invoice factoring services or asset based lending. Invoice factoring improves your cash flow because you don’t have to wait 30+ days to collect your receivables. Government Contractors Government contractors are comprised of two types …

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Invoice factoring contracts

Factoring Services

It’s important to compare different criteria when looking for factoring services. Factoring companies serve different industries, offer different rates, and provide different levels of customer service. Factoring Rates and Fees The minimum rate percentage charged by most invoice factoring companies varies from one to two percent. Rates can increase as the receivables age and factoring …

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Tax Form 8821

Many factoring companies require tax form 8821 before signing a factoring services agreement. I recently had a factoring prospect applying for factoring services when she became frustrated because the factoring company required tax form 8821. Her thought was “this factoring company seems to want everything!” The IRS tax form 8821 legally authorizes a factoring company …

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Invoice factoring reserve for bad debts.

Factoring Reserves

Factoring companies typically don’t advance the full invoice amount because they hold back a reserve for contingency purposes. If you factor a $1,000 invoice and the factoring company advances 80%, then you only get $800. If your customer doesn’t pay the invoice for whatever reason, then the factoring company at least has $200 to help …

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Factoring Advance Rates

Factoring companies charge for their factoring services as a percentage of the full invoice amount. If you factor a $1,000 invoice with an 80% advance rate, the price will be quoted as a percentage of $1,000. For instance a factoring rate of 3% will cost $30. I’ll also give you a more detailed explanation of …

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Online Lending

Online lending has made significant inroads into the small business lending market. Fast loans, quick turn-around, and easy approvals have made many online lenders an attractive source of funding for businesses that need financing. However, there’s a lot of drawbacks to consider before you go get your one-day approved cash advance. In fact, borrowers should …

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Factoring Rates

Factoring rate structures come in basically two different varieties – fixed and adjustable. In recent years there have been many factoring companies offering what appears to be extremely low factoring rates, often less than one percent. However, like most things in life, if it’s too good to be true, it usually is. The reason why these …

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Factoring Credit Facilities

If your shopping for a factoring company, you need to consider the credit facility or credit limit available. Factoring facilities come in many sizes as we’ll see below. Credit Facility Sizes Vary Factoring companies offer credit facilities according to their debt capacity. Some factoring companies specialize in credit facilities below $25,000, while normal facilities are in …

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