In a typical factoring relationship, the client effectively outsources the management of their accounts receivable and protects against credit losses. In the role of factor, Milberg acts as its client's 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. But a factoring relationship with Milberg is like having a savvy partner with clout: receivables turn much faster and cash is applied daily. Bookkeeping is always current and accurate, and approved credits relieve the financial and emotional burden of questionable receivables. With Milberg as a partner, clients are often able to sell to customers that they might not consider selling to on their own.

A factoring relationship involves four key elements:

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 late or skipped payments and provides clients with rapid notification of claims and allowances. Payment of accounts receivable is 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 overadvance lines (i.e., lines in excess of accounts receivable) available to finance inventory purchases.

Collection: Milberg deposits funds into the client's account as receivables are collected.

Maturity: Milberg makes scheduled payments to the client's account, based on average due date of sales.

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.