Frequently Asked Questions

1. What is Accounts Receivable Financing (Factoring)?

Factoring is the selling of a business's commercial accounts receivable for immediate cash. A factoring company pays the business a percentage of the face amount of the accounts receivable and deducts a fee for the cost of factoring. The factoring company will then collect all receivables for their client. Factoring also allows businesses automatic access to credit and collection services with no need to spend profits on maintaining accounts receivables.

More specifically, factoring provides you with the funds to cover business expenses. The financing transaction is settled once your client pays. You conduct business as usual; delivering product or service to your client then generating an invoice, the factoring company advances you a pre-determined percentage of the invoice, the remainder is held in reserve. Once your client pays the invoice, you receive the remaining percentage of the invoice, less a small financing fee.

Factoring is not a loan; it is far simpler and faster than typical bank financing. With factoring, there are no monthly payments, no new debts, no loss of control, no giving up of equity and no lengthy approval process. Factoring is not a loan but rather the transfer of assets.

2. Why choose Accounts Receivable Financing?

Any business that invoices customers for payment can benefit from factoring services. A factoring company is often able to extend more financing than a bank. Factoring companies such as Sierra Finance are able to set a credit limit based on your company's sales potential, not your company's financial situation. This allows you to grow your company to its true potential.

3. How quickly will I be funded?

Same day financing is available but all work orders must be verified with your customers before funding. The verification process usually takes a couple of hours from the time we receive your invoices.

4. Can I still qualify with bad credit?

Yes, the benefit of factoring at Sierra Finance is that credit is granted based on the credit worthiness of your customer not the financial strength of your company.

5. Is there a minimum amount or number of invoices that must be factored?

There are no weekly, monthly, quarterly, or annual minimum volume requirements. Sierra Finance provides funding to companies of all sizes; we let individual companies decide how many invoices are factored with us.

6. Which customers may I fund?

The most important prerequisite for a company is to do business with reliable and reputable customers. We perform credit background checks to verify your customer's history in meeting its financial obligations. This is a fairly simple process, as verification can be conducted over the phone.

7. How many years do I have to be in business in order to be funded?

There is no minimum number of years of operation required to qualify for factoring services. Sierra Finance funds most types and sizes of businesses from start-up companies to well established firms.

8. What percentage of my invoice is available to me when I factor my invoices?

Depending on the initial rate that is offered to your company your advance can be up to 95% of the invoice amount.

9. What are the benefits of Accounts Receivable Financing?

• Stabilize cash flow
• Take advantage of purchase discounts
• Improve your credit status
• Payoff loans and other debts
• Offer better credit terms to your customers
• Purchase inventory sooner and fill orders faster
• Meet seasonal demands
• Spend less time managing your receivables and more time managing your business