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Factoring

Factoring

A factoring relationship with Milberg is good for the bottom line, as receivables turn faster and cash is applied daily. Bookkeeping is always current and accurate, and approved credits relieve the financial and emotional burden of questionable receivables. What’s more, clients are often able to sell to customers that they might not consider selling to on their own.

In a typical factoring relationship, the client outsources the management of their accounts receivables and protects against credit losses. As a factor, Milberg acts as your credit, collections and accounts receivable departments by conducting credit analyses, setting limits on credit exposure, collecting accounts receivable and recording accounts receivable transactions. By "approving" a particular account receivable, Milberg agrees to absorb potential credit losses on that account.

Four Key Elements of a Factoring Relationship

Credit Approval/Protection

In the event that a customer whose credit has been approved is unable to pay its bills, Milberg is responsible for payment to the client.

Collections

Milberg follows up on late or skipped payments and provides clients with rapid notification of claims and allowances. Payments of accounts receivables are made directly to Milberg.

Bookkeeping

Milberg tracks all invoices on our system, recording sales, cash payments and credits.

Payment Arrangements

  • Advance: This is essentially a line of credit secured by receivables. Milberg advances funds against accounts receivable before receiving payment, up to a specified percentage of receivables. Milberg may also make over-advance lines (i.e., lines in excess of accounts receivable) available to finance inventory purchases.
  • Collection and Deferred Purchase: Milberg deposits funds into the client's account as receivables are collected.
  • Non-Notification Factoring: Client remains responsible for collecting its own receivables. For all factoring arrangements, Milberg charges a commission based on an agreed-upon percentage of sales volume. In the case of advance arrangements, interest is charged on the daily balance of the advances outstanding.

For factoring arrangements, Milberg charges a commission based on an agreed-to percentage of sales volume. In the case of advance arrangements, interest is charged on the daily balance of the advances outstanding.