Factoring accounts receivable is a financial strategy that can help businesses improve their cash flow and manage their working capital efficiently both domestically and abroad.

In this blog post, we will explore the two types of factoring and the benefits it offers to businesses.

Types of Factoring

● With recourse: if a customer fails to pay, the factor sells the invoice back, and the business takes credit risk. However, most customers that factor with recourse purchase credit insurance to mitigate the credit risk. In contrast,

● Without recourse: the factor takes credit risk.

Benefits of Factoring

● Immediate cash flow: Factoring involves selling accounts receivable to a third party (a factor) at a discount, in exchange for quick cash. This can help businesses access the funds they need quickly, without having to wait for customers to pay their invoices.

● Improved liquidity: Factoring can improve a company’s liquidity, allowing them to pay bills, make investments, and grow their business.

● Reduced credit risk: By selling accounts receivable, businesses can transfer the credit risk associated with those invoices to the factor. This can help protect against non-payment and bad debt losses that can impact your credit.

● Outsourced credit and collections: Factoring companies often handle credit checks, collections, and other administrative tasks related to accounts receivable, allowing businesses to focus on other core aspects of their operations and growth.

International factoring

International factoring offers additional benefits for businesses, including:

● Mitigated Foreign Exchange Risk: International factoring can help businesses mitigate the risk of currency fluctuations when selling goods or services to customers in foreign countries.

● Improved Cash Flow: International factoring provides businesses with immediate cash for their export sales, which can help improve their cash flow and working capital position.

● Reduced Credit Risk: International factoring can help protect businesses against non-payment and bad debt losses when exporting to foreign markets.

● Access to Financing: International factoring can also provide businesses with access to financing, such as pre-export and post-export financing, enabling them to expand their international operations.

Overall, domestic, and international factoring can be valuable financial tools for businesses looking to improve their cash flow, manage risk, and grow their operations, both domestically and abroad.

Other key points

● There is an Advance rate of 80% – 90% on eligible receivables.

● Most international receivables will need to be insured with a credit insurance policy.

● This is not considered a loan and will not appear on your balance sheet.

● Single debtor factoring and forfeiting are also available if your business needs them.

Factoring can be a valuable financial tool for businesses looking to improve their cash flow, manage risk, and grow their operations, both domestically and abroad. To explore factoring options that are personalized to your business, contact us at AmRock Financial.

Purchase order financing, inventory & structured trade finance are solutions to boost your business cash flow.

By having the right financing in place, businesses can avoid cash-flow challenges, take advantage of their growth potential & increase profitability. 

What is Purchase Order (PO) Financing?

Purchase Order Financing, also known as PO Financing, is a financial arrangement where a third-party lender provides funds to a company to fulfill a specific purchase order. It is primarily used by businesses that face cash flow constraints and lack the necessary funds to fulfill large orders especially as they are scaling as a business.

The lender advances the funds needed to cover the cost of purchasing the goods specified in the purchase order. Once the goods are delivered and the customer pays the invoice, the lender is repaid along with any agreed-upon fees and/or interest.

For example, at AmRock Financial we have a customer who manufactures electronic devices.  The company received a large purchase order from a retailer to supply a large quantity of smartphones. However, the manufacturer lacked the necessary funds to purchase the required components and fulfill the order.

The company reached out to us to explore potential PO Financing options.  We quickly assessed the viability of the purchase order and agreed to find a lender that would fund the manufacture of the smartphones. We brokered a deal with a PO financing lender who agreed to pay the suppliers directly for the raw materials, enabling the company to fulfill the order. Once the smartphones were delivered to the retailer and the invoice was paid, the retailer’s payment was directed to the PO lender directly. The lender deducted their fees and interest and transferred the remaining funds to the manufacturer.

How do Accounts Payable work?

Accounts Payables, often referred to as AP, represents the money a company owes to its suppliers or vendors for goods or services received on credit. It is a liability on the company’s balance sheet, reflecting the outstanding payments that need to be made to the suppliers within a specified timeframe.

For example, AmRock Financial worked with an importer of toys who received a shipment of toys from their regular Vendor. The Vendor required payment when the containers arrived at the US Port.   The Importer was short on liquidity and was unable to pay the Vendor. We found an AP Lender who paid the Vendor. The Lender then extended the payment terms to the Importer for 90 days. AP Financing allowed the Importer to pay and buy the goods they needed and deliver them to his retail customer. 

AP or PO financing is a financial tool that business owners can be used to increase sales or fulfill existing orders.

Contact us at AmRock Financial and we will gladly help you with the right financial solution for your business.

The best bank for you might be in Massachusetts, Michigan, or Texas!

Since 1994, approximately 7,808 banks have left the industry because of mergers, consolidations, or failures, FDIC data show. An unpredictable economy and more regulations have taken their toll on the sector, leaving small business owners with fewer options to find the right lender.

Despite a historically low number of bank failures in recent years, the slow and steady decline in bank numbers continues. Few new banks are being chartered, and banks continue to merge with one another, reducing the number of charters.

Because changes in banking policy are often widespread, they can have systemic effects on the economy. As banks tightened their credit policies and began offering fewer loans and lines of credit to small companies, during a recession, banking effects on business may be magnified because cash is in such high demand.

Tips for Finding Financial Help

1. Research who is the right bank for your industry. It is not always the one nearest.

2. Consider a loan advisor. Just as many consumers would like to have a physical bank nearby, a good advisor is often preferred by many consumers. A good loan advisor can help you make smarter financial decisions to be in better control of your money while also being available for day-to-day questions you may have.

3. Look for other business owners and make time to ask specific questions directly related to their experience and your challenges.

4. Invest early in getting your financial statements up to date, corporate structure, ownership structure, and shareholders agreements in place.

5. Consider insuring your accounts receivables before contacting a new lender.

At AmRock Financial, our experts specialize in helping business owners & entrepreneurs obtain the capital they need to succeed. By having the right financing in place, businesses can avoid cash-flow challenges, take advantage of their growth potential & increase profitability. We provide direct funding to clients through purchase order finance, inventory & structured trade financing. If we are unable to finance your business directly, we will leverage our long-established relationships with more than 1,500 lenders to secure the financing you need to survive & thrive.

You pay nothing if we are unable to get you funded. We only charge a success fee after you get funded, so our services are FREE until we succeed.

Having aircraft financing needs?  AmRock Financial can help you soar to new heights if you are considering buying an       aircraft for your business, one possible way to get financing  is with an equipment loan.

Are you ready for take-off? Here are the top 7 tips to keep in mind when applying for aircraft financing:

1. Credit Score and Financial History

Lenders will consider your credit score and financial history when determining whether to approve you for financing. It’s important to have a strong credit score and a history of responsible financial management to increase your chances of approval.

2. Type of Aircraft

The type of aircraft you want to finance can impact the terms and conditions of your loan. Generally, lenders prefer to finance new or nearly new aircraft, as they offer less risk of mechanical issues and depreciation.

3. Collateral

The aircraft itself will usually serve as collateral for the loan. You may need to provide additional collateral, such as a personal guarantee or a lien on other assets.

4. Down Payment

Lenders may require a down payment of 10-20% of the aircraft’s purchase price. A larger down payment can reduce your monthly payments and improve your chances of approval.

5. Terms and Conditions

Be sure to carefully review the terms and conditions of the loan, including interest rates, fees, and repayment schedules. Consider working with a financial advisor to help you understand the details and negotiate the best terms possible.

6. Maintenance and Insurance

Lenders may require you to carry certain levels of maintenance and liability insurance on the aircraft to protect their investment.

7. Lender Requirements

Different lenders may have different requirements for aircraft financing. Consider shopping around to find the lender that best fits your needs.

Overall, aircraft financing can be a complex process, and it’s important to do your research and work with knowledgeable professionals to ensure that you make informed decisions and secure the funding you need.

For businesses seeking financing solutions, equipment financing can serve as a powerful tool to secure much-needed capital. Beyond its primary purpose of acquiring or upgrading equipment, this financing option can also be utilized as an asset-based loan.

By leveraging the value of their equipment, borrowers can tap into additional funds, enhance cash flow, and fuel growth. In this blog post, we will explore how borrowers can effectively use equipment financing as an asset-based loan to secure financing and propel their business forward.

Equipment financing typically involves a lender providing funds for the purchase or lease of specific equipment. The equipment itself serves as collateral, giving the lender security in case of default. However, borrowers can also utilize this collateral value to secure additional financing beyond the equipment’s cost.

Here’s how:

1. Assessing Equipment Value: To leverage equipment financing as an asset-based loan, borrowers must evaluate the value of their existing equipment. Lenders will always choose their own third-party appraiser. Conducting a thorough appraisal can help determine the fair market value of the assets. This evaluation will serve as a basis for securing additional funds.

2. Collateral-Based Loan: With the appraisal in hand, borrowers can approach lenders to negotiate an asset-based loan. In this scenario, the equipment itself serves as collateral, minimizing the lender’s risk. By pledging the equipment’s value, borrowers can access capital that is typically aligned with a certain percentage of the equipment’s appraised worth.

3. Enhanced Cash Flow and Capital: Once approved, borrowers receive additional financing based on the agreed-upon loan amount. This injection of capital can be used for various purposes, such as expanding operations, funding marketing initiatives, hiring new employees, or even refinancing existing debt. By freeing up cash flow, businesses can seize growth opportunities and strengthen their financial position and balance sheets.

4. Repayment and Terms: Just like standard equipment financing, asset-based loans have repayment terms and interest rates. These terms are negotiated between the borrower and the lender and should be carefully reviewed. It is crucial to assess the loan’s impact on cash flow and ensure that the business can meet the repayment obligations without hampering daily operations.

5. Potential Risks and Benefits: As with any financial arrangement, risks and benefits are associated with leveraging equipment financing as an asset-based loan. The primary benefit lies in the ability to access additional capital without exhausting other financing avenues or depleting cash reserves. This funding can catalyze business growth and provide flexibility in managing working capital needs.

However, it’s essential to consider the risks of defaulting on loan payments and the potential loss of valuable equipment. Proper risk assessment and strategic planning are necessary to mitigate these risks effectively.

In summary, equipment financing is not limited to solely acquiring assets; it can be a gateway to secure additional funding. By leveraging the value of existing equipment, borrowers can tap into capital through asset-based loans. This approach empowers businesses to expand, innovate, and strengthen their operations. However, it is crucial to conduct thorough evaluations, negotiate favorable terms, and consider the associated risks before embarking on this financing journey. With careful planning and prudent decision-making, equipment financing as an asset-based loan can be a valuable tool to propel businesses toward their growth goals.

Working with AmRock Financial can be a good option for finding a variety of financing options. With a marketplace of 1600+ prescreen lenders, businesses can compare rates and terms and potentially find a loan that fits their specific needs and financial situation. Our process can make it easier and faster for a business to have access to capital, as we do all the underwriting and find the best lending options.

You pay nothing if we are unable to get you funded. We only charge a success fee after you get funded, so our services are FREE until we succeed.

Call us today at 305-440-8480 or email us at applications@amrockfinancial.com

AmRock Financial Helps Staffing Company Receive a $5 Million Loan

MIAMI- Small and mid-sized businesses are struggling to keep their doors open due to the effects of the global pandemic. Business owners have been flocking to banks to obtain whatever loan they can get their hands. Unfortunately, banks have restricted lending, making the searching process difficult for small business owners.

One of Miami’s leading financial firms, AmRock Financial, has seen an influx of small business owners who are ready to close their doors and file for bankruptcy. Since 2007, AmRock has provided more than $1 Billion in financing to small and mid-sized businesses. It has recently expanded its team to help its growing number of clientele obtain the funding they need to succeed. AmRock Financial does not charge small business owners any upfront fees, only modest success fees based on performance, and uses its network of over 1,500 lenders to match debtors to the right lender.

A local staffing company that provides industrial and administrative positions in the logistics and warehousing space, applied for a loan at a local Bank, months later the loan was eventually denied.  A common manifestation of what happens in our banking system nationwide. The banker recommended AmRock Financial and referred the business owner to us. AmRock met with the owner and after listening to his short- and long-term goals, structured a $5 million, 10-year term loan with another Community Bank, which is one of 1,500 verified banks in the AmRock Financials network. The company paid off  $4 million of existing debt and  received an addition $1 million in working capital.

Obtaining a bank loan should be easy in America but all too often, the process is filled with uncertainty, frustration, and distrust. Having a skilled commercial loan advisor/broker like AmRock can be a valuable asset.

Founder and CEO Frank Tomasino says “In 2007, when we began, we had no lenders, no relationships and the economy was deteriorating and eventually it collapsed in 2008. Banks collapsed and most were bailed out by the government, the economy descended into an abyss, but we knew eventually new lenders would need to start lending. This is similar to what we are seeing now with the global pandemic. We know that certain community banks are now lending but finding a local bank could be a challenge. AmRock has found that your perfect bank might be located in an entirely different state as the landscape has changed.

Since the beginning of the pandemic, AmRock Financial has helped hundreds of domestic and international businesses keep their doors open, this staffing company is just one of many. The AmRock team is hoping to help as many more as possible.

MIAMI-AmRock Financial held a free financial training workshop with Crestmark Bank, a division of MetaBank. The workshop was presented by Crestmark Senior Business Development Officer Robert Harbers and AmRock Financial CEO Frank Tomasino. It was intended to educate and inspire attendees on the asset-based lending and factoring market. 

The workshop was held in the AmRock Financial office and online via video chat. Attendees learned about Crestmark Bank, the asset-based lending, factoring and healthcare finance market. They learned about new solutions to help clients obtain the best loan possible as well as how to acquire new clients who are also looking for help finding an alternative funding solution.  

Crestmark bank focuses on asset-based lending and factoring, specifically on domestic equipment and inventory financing. The banks’ mission is to provide capital to the marketplace for people who need alternative lending solutions. They are also the top provider of MetaBank cards.

AmRock Financial is a leading brokerage firm based in Miami, Florida also specializing in connecting borrowers to top-tier lenders. Their mission is to provide funding for businesses in order for them to succeed. 

To learn more about future workshops visit our website amrockfinancial.com

Crestmarkbank.com

In this new Spotlight series by AmRock Financial, we will            explore all the debt financing options that are available to your company.

In this first Spotlight, we focus on why an Asset Based Loan (ABL) could be the right funding option for your company so you don’t ever have to worry about giving up equity in your business.

ABL is a form of financing that involves borrowing against the value of a company’s assets. These assets may include inventory, equipment, accounts receivable, or real estate. In an asset based loan, the lender or bank assesses the value of the assets and then offers a line of credit or a term loan based on that value.

There are several reasons why companies should consider asset based loans as a source of financing:

Firstly, an asset based loan can provide companies with access to larger amounts of funding than traditional loans. This is because the loan is secured against assets, which reduces the lender’s risk. As a result, companies can typically borrow more money through an asset-based loan than they could through an unsecured loan. This can be particularly beneficial for companies that need to finance large projects or make significant investments in growing their business.

Secondly, an asset based loan can be more flexible than traditional loans. This is because the loan is secured against assets, rather than being based solely on a company’s creditworthiness. As a result, companies with weaker credit profiles may still be able to obtain funding. Additionally, the terms of the loan can often be tailored to suit the company’s needs. For example, the repayment schedule may be adjusted to match the company’s cash flow, or the loan may be structured to allow for seasonal fluctuations in revenue.

Thirdly, asset-based loans can be obtained more quickly than traditional loans. This is because the lender is primarily focused on the value of the assets, rather than on a lengthy credit review process. This can be particularly important in situations where a company needs funding quickly in order to take advantage of a business opportunity or to address a pressing financial need.

Finally, asset based loans can be a good option for companies that are growing rapidly or undergoing significant changes. This is because the value of the assets is likely to increase over time, which means that the amount of funding available through an asset-based loan may also increase. An added benefit to consider as the company’s financial profile improves, it may also become eligible for more favorable loan terms or lower interest rates.