SOURCE: The Interface Financial Group, Inc. (IFG)

invoice factoring

January 06, 2010 08:00 ET

Eight Reasons for a Business to Consider Invoice Factoring in 2010 Credit Restricted Economy

The Interface Financial Group (IFG) Offers Funding Solutions for Small to Medium-Sized Businesses in the New Year

BETHESDA, MD--(Marketwire - January 6, 2010) - The Interface Financial Group (IFG), North America's largest alternative funding source for small businesses, announced the eight primary reasons why small to medium-sized businesses should consider invoice factoring, otherwise known as accounts receivable factoring, as an alternative form of financing available in 2010. IFG offers short-term financial resources including single invoice factoring to companies in the United States, Canada, Australia, New Zealand, and Singapore.

In today's credit restricted economy, it is more important than ever for small to medium-sized businesses to know what forms of financing are available to them. Banks are protecting their internal balance sheets and not taking on the risk in the form of loans to small businesses; therefore, emerging growth companies need to rely on alternative forms of financing to ensure their success.

Factoring is a form of commercial financing or debt financing which has collateral as a basis for borrowing money. An invoice or obligation to pay by an account debtor is the collateral for borrowing. A factoring company makes arrangements to purchase a company's invoice, pays immediately, and in essence loans money until the company's customer's invoice is paid.

The eight benefits of factoring include:

   1) Speed: Unlike most capital resources, the factoring relationship can
      be set up within days, and once set up the funding of invoice can
      happen between 24 to 48 hours.
   2) Financial: Most of the funding decision is based on the credit of
      the customer.
   3) Credit limit: As long as the client is invoicing a credit-worthy
      customer, factoring relationships can grow with the client so there
      may not be limits to access of capital.
   4) Discipline: Lack of discipline often causes companies to not pay
      loans regularly down the line. With factoring, there's no lack of
      discipline -- each time a customer pays the invoice, it retires the
   5) Equity: Factoring is considered an off-balance sheet form of
      financing, which keeps any net term liability off the corporate
      balance sheet, preserving the equity position in a positive manner.
   6) Set up: The process of getting set up requires minimal paperwork and
      no lengthy negotiations compared to banks and equity venture funding.
   7) Cost: The cost of factoring invoices is relative to the short-term
      nature of the transaction, not lasting more than 90 days -- more
      than a bank, but less than a VC. Companies with thin profit margins
      are not good candidates for factoring to grow their business.
   8) Growth: Having access to capital improves the financial position of
      a growing company. While factoring is a short term solution, it
      ultimately leads them to conventional bank financing.

"Here's one typical example of how factoring works, and why it can be so important to a company on the verge of doubling in size," said George Shapiro, chief executive officer of The Interface Financial Group (IFG). "This company has struggled to get a contract for a long time, which has created stress on their finances. They finally get the contract and send out the first invoice, but at the same time a dozen new hires need to be put in place. With factoring, the next day access to capital tied up in the invoice is available to the company, allowing them to hire people, make payroll two weeks later, and do more business."

Invoice factoring benefits businesses that do not get paid for 30 to 60 or 90 days by advancing up to 90 percent against invoices. IFG looks at the creditworthiness of the client's customers and can fund within as little as 24 hours. There are basically three parts to a factoring transaction: 1) Advance -- the percentage of the total amount of the invoice the company has access to when they are funded, which is around 80 percent, and depending on the industry, it can be 90 percent; 2) Reserve -- the remaining funds from the invoice that are held back and released when the customer pays the invoice; and 3) Discount fee -- the fee associated with doing the transaction which gets deducted from the reserve. Based on how long it takes to receive payment of the invoice, the fee can be from two to five percent of the total value of the invoice.

The Interface Financial Group specializes in construction factoring, and today IFG is finding that single invoice factoring is a popular new tactic, allowing companies to factor one invoice at a time. The company does not expect to buy 100 percent of a company's receivables, and there are no minimum or maximum sales volume requirements.

IFG's recent private label factoring products include: Export Factoring, providing factoring services for companies who export from the United States and Canada; P.O. Funding to finance purchase orders when a company receives a purchase order and needs to purchase supplies to fulfill the order; and Inventory Financing, a solution promoting a company's growth by funding them when they must expand and purchase inventory.

About The Interface Financial Group (

The Interface Financial Group (IFG) is North America's largest alternative funding source for small business, providing short-term financial resources, including invoice factoring (invoice discounting). The company serves clients in more than 30 industries in the United States, Canada, Australia, and New Zealand, and offers cross-border transaction facilities between the U.S. and Canada. With more than 140 offices across North America and over 35 years of experience, IFG provides innovative invoice factoring solutions by offering short-term working capital to growing businesses. Single invoice factoring, or spot factoring, is an extremely fast way to turn receivables into cash.

IFG was founded in 1972 to provide short-term working capital to help small to medium sized businesses grow. The IFG organization operates on a local level, providing clients with local knowledge and experience and business expertise in numerous diverse areas in addition to accounts receivable factoring, including accounting, finance, law, marketing and banking.

Contact Information

  • Media Contact:
    Kristin Gabriel
    MarCom New Media
    T: 323.650.2838
    E: Email Contact

    The Interface Financial Group, Inc.
    7910 Woodmont Avenue, Suite 1430
    Bethesda, MD 20154
    T: Toll Free: USA -- 877.210.9748
    T: Toll Free: Canada -- 877.340.6893