A Partner for Companies with Accounts Receivable Challenges and Risks – Milberg Factors

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Last year was extremely challenging for apparel manufacturers and retailers, but a few companies fared better than others. For example, it was a profitable year for apparel companies that produce athleisure and casual apparel. At the same time, makers of men’s suits and ladies’ dresses saw a sharp drop in sales since a large cohort of white-collar employees were forced to work from home. 

Many companies also pivoted and used the opportunity to turn fabric pieces into masks and other personal protection equipment (PPE). 

While manufacturers experienced increased demand last year, they continue to cope with hardships this year due to a sharp rise in many production costs and interruptions in global supply chains that still have not been completely resolved.

Nevertheless, most companies’ financial performance has improved this year as industries with account receivables 90 days past due decreased significantly in the first quarter of 2021, according to a report by Dun & Bradstreet and the Credit Research Foundation.* Thirty of the more than 230 industry segments surveyed reported that 10% of their account receivables were more than 90 days past due. In contrast, there were 45 industries with more than 10% of their account receivables three months past due in 2020’s second quarter.

Overall, apparel and accessory stores, along with apparel manufacturers, reported strong results in the survey. There has been good news this year for bricks and mortar retailers. In 2021, retailers have also been benefiting from lower rents and more flexible lease terms. A large number of vacant stores has led retailers to negotiate favorable deals with landlords.

Also, more stores have opened so far in 2021 than have closed, according to Coresight Research. U.S. retailers have announced 3,199 store openings and 2,558 closures through March. For 2020, the firm reported 8,953 store closures and 3,298 openings.**

Unfortunately, the furniture industry continues to face many challenges as a result of disruption to global trade. Retail furniture and home furnishings stores, along with furniture manufacturers, reported that 9% to 15% of their account receivables were 90 days overdue, according to Dun & Bradstreet.

In 2021, the furniture industry continues to face supply chain and various other disruptions caused by the COVID-19 pandemic. Manufacturers have been coping with skyrocketing production expenses due to rising global raw material costs, materials shortages, import and delivery delays, labor disruptions, a stretched receivables billing cycle, and rising logistics costs.***

Through the first half of 2021, the economic conditions for apparel companies and retailers have improved. Still, apparel and furniture companies typically partner with a factor to meet their financing needs in difficult times and finance growth and production for each season. Companies must obtain financing upfront for materials sourcing and procurement even though they will not be paid for several weeks when the final product is shipped and sold to the retailer.

This financial support is vital now as apparel companies adapt to new customer preferences after the pandemic. In addition, companies look to a factor to help them navigate the retail landscape by underwriting the creditworthiness of their customers.

For businesses facing these challenges, Milberg Factors, Inc., a leading private firm focused on factoring and commercial finance, has several creative and flexible factoring solutions:

Advance Factoring Relationship

  • Milberg provides the basic elements of a traditional factoring relationship — credit approval/protection, collections, and bookkeeping — and the client can borrow funds against their factored receivables (up to a specified percentage of receivables).
  • To finance inventory purchases, Milberg may also extend over-advance lines (i.e., lines in excess of receivables).


A Collection Factoring Relationship

  • Includes credit review/approval, collections, and bookkeeping; financing from Milberg is not required. The client transfers the credit risk of bad debts on approved accounts to Milberg.
  • When factored receivables are assigned to Milberg, Milberg is the owner of record of those receivables. Collections on receivables are then forwarded to the client as they are collected. 
  • Outsourcing the collections and bookkeeping functions associated with handling receivables means the client no longer has the hassles and high costs of running collections, receivables, and credit departments.


Non-notification (Deferred Purchase)

  • Non-Notification Factoring is best for clients who only want credit protection for their receivables.
  • In a Non-Notification Factoring relationship, our credit department acts as the client’s credit department like other factoring relationships. We analyze creditworthiness, set credit limits, and provide credit protection. However, clients remain responsible for collecting their own receivables.


As the apparel and retail industries recover from the disruption of 2020, factors will continue to prove their value by providing their traditional core products such as debtor-risk coverage and third-party accounts-receivable management.

Milberg provides its clients risk management and financing resources. In addition to delivering our core products and services, we can—and do—share best practices among our many clients that will help you navigate today’s uncharted waters.


For more information about Milberg Factors, Inc., please contact Daniel R. Milberg at (212) 697-4200, David M. Reza at (818) 649-7587, or Ernest B. White at (336) 714-8852, or email us at info@milbergfactors.com.