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FAQs |
| Q: |
What if there is derogatory information in my company’s financial history? Do I need to meet financial ratio requirements? |
| A: |
In most cases, derogatory information such as bankruptcy or poor credit does not affect your ability to obtain A/R financing. We focus on the creditworthiness of your customers and the invoices you generate rather than your personal or business credit ratings. We do not measure your debt-coverage, net worth, or profitability ratios that many other lenders
require.
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| Q: |
If I finance my A/R, can my business still borrow from other sources? |
| A: |
Yes! That is one of the prime advantages of A/R financing. Generally, UFS takes only a security interest in your accounts receivable. That means your other assets, such as property,
equipment, intellectual property and inventory, are available as collateral for other lenders.
In contrast, commercial banks usually take a security interest in all of your assets —
restricting your ability to obtain funds from any other source.
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| Q: |
What if I already have a loan from a bank? Am I able to finance my A/R? |
| A: |
If your bank has taken a security interest in all of your assets, your A/R will not be legally available as collateral in any A/R financing scenario. In rare cases, a bank will only take a partial security interest in your assets, which would then allow you to apply for a credit facility.
However, as a value-added service, UFS will work together with your bank to either restructure or pay off your current loan in order for you to get the full value of your receivables. |
| Q: |
If I already have a line of credit with a bank, why would I consider an A/R credit line instead? |
| A: |
A/R financing with UFS allows more flexibility and fewer restrictions than bank lines of credit. Banks are more stringent about the types of receivables they will consider as collateral. Typically, banks will only give credit for receivables up to 90 days old, but UFS frequently extends credit for receivables that are 120-150 days old, and can consider receivables that are up to 270 days in certain cases. Additionally, unlike banks, UFS can offer consulting, collections assistance and other professional services. |
| Q: |
What happens if some of the A/R customer accounts I finance become seriously past due? |
| A: |
UFS can provide financing for current and past due accounts. Typically, you will be able to
increase the frequency of on-time payments just by financing your A/R. If an account does
become substantially overdue, we will discuss the situation with you first and make every
effort to resolve the situation before taking any collections action. We are respectful of
your customers and your relationships with them.
A majority of our clients find that hiring a billing & collections firm in conjunction with A/R financing prompts customers and payers to pay far more quickly. UFS has the capacity to partner with a number of expert firms that can streamline the collections process. |
| Q: |
How will A/R financing affect my customer relationships? |
| A: |
This type of financing can often help your relationships. Billing through a third party allows you to focus on your customers’ business needs while the outside firm manages collections. This can help you improve the client service you offer while reducing your administrative time and expense.
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