Crestmark announces our new website

by Michelle 2. August 2010 11:21

After almost a year of hard work and collaboration we are very excited to launch our new, updated website!

Crestmark is an FDIC insured financial institution which specializes in providing working capital through accounts receivable lending to small and medium sized businesses across the country. The bank was originally founded in Troy, MI and in recent years has expanded it’s footprint through a series of acquisitions. These acquisitions brought in already established, successful accounts receivable factoring companies. All of these events lead to the need to create a newer, updated and more comprehensive website.

We hope that you will find the new site informative and helpful! Within the pages of the site, you will find explanations of the various types of solutions that we offer; accounts receivable factoring, asset based lines of credit, and accounts receivable loans. I think you will also find that we are very diverse in the industries we serve; staffing, manufacturing, distribution, apparel, government contractors to name a few.

So…take a look, and let us know what you think. We think you’ll be pleased!

 

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Last Resort Financing?

by Michelle 4. June 2009 04:22

There has long been a misconception that companies who use factoring are dangling one foot over the abyss of financial ruin.  This perception is untrue and often the result of rumor and ignorance of what factoring really is and how thousands of business owners benefit from this type of financing.  

 

• Do business owners turn to factoring when they have experienced a downturn?

 

• Is factoring a good option for companies who have been turned down for a more ‘traditional’ line of credit?

 

The answer to both of these questions is, yes.  So, while using factoring to help a business owner take control of their cash flow and firm up their balance sheet to get them through a rough patch; it can also be said with a good measure of veracity that factoring can also assist a strong business grow and keep up with increased demand.

 

 

Many business owners turn to accounts receivable factoring because their cash flow is inconsistent.  A business may have a relatively small cash flow for part of the year, and when they are in their peak business cycle, their cash flow increases significantly. 

 

By factoring their invoices business managers and owners control this cash flow cycle.  They find that rather than being reactive to the ebb and flow of their cash flow, they can make their receivables work for them.  It becomes a much easier and less stressful event to say ‘yes’ to new customers or larger orders once business owners are confident they are not going to be strangled by tight cash flow.

 

Used correctly, factoring is a very effective tool for a variety of situations.

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Accounts Receivable Financing

What Will My Customers Think?

by Michelle 4. June 2009 04:17

Almost to the client we are asked this question.  Understandably this is a common concern of most new clients. 

First, lets understand that as discussed in my previous blog about  factoring,  it is not a black mark for a business.  In fact it is very normal for a business to have a line of credit.  Factoring is little more than a line of credit which utilizes accounts receivable as collateral.  Having a factoring line in place can help to put your business on a much stronger footing than your competitors.  You have the advantage of being able to positively manage your cash flow.

You might be surprised to find out from your customers that some of them are already familiar with factoring and may even be having some of their invoices from other vendors factored.

What do you tell your customers?

Tell them due to growth and to keep up with your cash flow you have decided to factor your invoices.  This is a positive step for your business and will allow you to continue providing your customers with the great service they have come to expect.  Your customers will continue to have the same level of contact with you that they have always had.

By the way, this is also a benefit to your customers as it allows them the luxury of paying on terms.  You’re not the bank…we are!  So, let the factoring company worry about when your customers are going to pay your invoices.

Communicating proactively and positively with your customers will go a long way in making factoring a smooth transition.

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What Is Factoring?

by Michelle 20. May 2009 04:30

As defined by Wikipedia, www.wikipedia.org; Factoring  is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business.

Okay, so what does that mean to you?

I always tell business owners who are new to factoring; our clients all have two things in common:
• They all provide a product or service to another business.
• Our clients all have a majority of their customers on payment terms.  Meaning, our clients have to wait to be paid for whatever product or service they have provided to their customer.
From this common intersection extend many avenues as no businesses are exactly the same.  All have various business challenges, invoicing processes, and diverse customers.

 

To further explain the definition at the beginning of this blog in real world terms, this is how a typical factoring transaction works:

Example:


• ABC Distribution has an invoice for $1,000.00 from their customer;
Widgets R Us.
• ABC Dist submits the $1,000.00 invoice to Crestmark to be factored.
• Crestmark enters the invoice into our accounting software, and advances 80% of the $1,000.00.

 

• ABC Dist gets $800.00 wired to their bank.  The advanced amount is available to our clients the next morning.
• Crestmark keeps the 20% (or $200.00 in our example) in a reserve account for ABC.

 

• 30 days later Widgets R US pays the $1,000.00.  Payment is made payable to ABC and sent to our lockbox.  We post the payment and assess a fee for factoring the invoice.
• In a few days time (as long as it takes for Widget’s payment to clear our bank) we release the remaining reserves to our client.

 

The bottom line result of the above example is;

ABC has the use of $800.00 of the original invoice amount within 24 hours of presentment instead of waiting the 30 days for Widgets to pay.  Assuming a 2% fee (insert disclaimer, actual fees vary) for the first 30 day period; the above scenario will net $980.00 of the original $1,000.00 invoice to ABC Dist.

If you would like to speak with us about how factoring may work for your company, please visit our homepage.

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Accounts Receivable Financing | Brokers | Types of Factoring


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