About Factoring

Factoring turns your Accounts Receivables into Cash today. . .rather than 45-60 days later. It allows businesses to use a current asset to generate and finance more business.

Global Factoring Volume exceeds $1.3 trillion annually with USA volume exceeding $130 billion annually. Worldwide growth in Factoring has doubled in the last four years. Factoring is used by businesses of all sizes to provide added working capital on a just-in-time basis.

Factoring is a specialized funding instrument that falls somewhere between Equity Capital and Bank Financing. The primary benefit of Factoring is that you neither increase debt on the balance sheet nor sell off equity. Factoring is a form of Bridge Financing that creates high value for business owners.

Many times, banks remain the option of choice for the cost sensitive borrower. However, for businesses with few assets for collateral or a weak statement of cash flows, bank financing is usually unobtainable. If it can be obtained, the business owner must be prepared to endure restrictive terms, covenants, and guarantees. At the other end of the spectrum, equity capital remains the most expensive option. That is, assuming the business owner is able to attract a venture capitalist or other private investors. Given the effects on business ownership and profit sharing, businesses never stop paying for equity capital. Furthermore, business owners may encounter untimely demands for repayment, as well as unwelcome or meddlesome equity partners.

Positioned firmly in the center of this continuum is today's factor. Factoring increases cash flow without any debt obligation (good for your balance sheet) and is generally shorter in term. Thus, factoring can be far more flexible with fewer restrictions and covenants than bank financing. And, because factoring does not seek to establish an equity position with clients, ownership dilution and buyouts are not an issue. Factoring is not dependent, as banks and other investors are, on the financial soundness of the business, instead factors look at the soundness of the business's customers and their ability to pay.

For start-up businesses that lack impressive financials or businesses that do not want to enter restrictive agreements and long-term commitment, factoring is a desirable financial tool to increase cash flow.

The Factoring Process
The FACTORING process is simple. As a business owner, you sell your receivables to Liquid Capital, and receive an immediate infusion of cash, based on those invoices. In fact, you can receive up to 85% of the invoice immediately (within 24 hours) with the remaining portion less fees becoming available as the invoices are paid. With a pre-arranged fee structure in place, you decide how many invoices to sell and to what extent funding is required.

As well as funding, Liquid Capital also provides financial management assistance. It is a comprehensive service package that allows you to focus on operating your business, without the need for credit and collection staff and the distractions of cash flow issues.

In fact, it is like outsourcing your Accounts Receivables Department much the same way many businesses outsource payroll. Many companies rely on Liquid Capital for all their Credit, cash processing, receivables management and collections functions thus eliminating the need for staff and the headaches associated with managing cash flow.

Who Factor's
Most of our clients are small and mid-sized businesses that are growing very fast and. . . rapid growth is consuming cash for supplies, inventories, personnel and other costs yet . . .the receivables are sitting out there as an untapped asset. Business is good, profits are up - but you still need cash. Some times businesses must walk away from new orders, others may Òrob Peter to pay PaulÓ. Neither is a good situation. Businesses Factor because they know they will not have to worry about cash flow and having adequate working capital to meet their needs. Their working capital increases with their business. This is regardless of their credit rating or how long they have been in business. Other examples include:

New Businesses

• No track record

• Rapid growth consumes cash
• May challenge credit rating

• Even Debtor in possession bankruptcy

• Cash Flow is unpredictable.
• Puts strain on profits and balance sheet

• Nobody wants them

• Bad relationship
• Change in criteria
• Outside parameters