Receivables Financing for Added Funding and Credit Protection
The pervasive economic uncertainty resulting from the COVID-19 crisis has left many businesses searching for additional sources of liquidity beyond their traditional financing sources, and a way to ensure that they will be paid for the products and services they provide. In today’s difficult economic environment, companies looking for a quick, flexible and cost-effective working capital solution should consider factoring, or receivables financing, to protect against bad debts and complement their traditional sources of financing.
For companies with quality accounts receivable, engaging a factor to act as an outsourced credit department can provide vitally important peace of mind during this time.
According to S&P Global, approximately one quarter of the companies S&P tracks in the retail and restaurant sectors are rated as having a 50% chance of defaulting on their debts.* “For companies with quality accounts receivable, engaging a factor to act as an outsourced credit department can provide vitally important peace of mind during this time,” says Daniel R. Milberg, President of Milberg Factors, Inc., a leading private firm focused on factoring and commercial finance. “Having a factor provide credit protection for your receivables can allow your business to sell larger amounts to more customers.”
In a factoring relationship with Milberg, the “factor” (Milberg) purchases a company’s accounts receivable, and the client company transfers the collection function and the risk of customer default to Milberg. Milberg guarantees payments for invoices that have been pre-approved in the event a customer goes bankrupt and is financially unable to pay its bills. If they desire, companies that enter into a factoring relationship with Milberg also gain access to working capital financing based on an agreed-upon percentage of receivables. By factoring their receivables, businesses can significantly reduce bad debt risk and monetize their accounts receivable.
Milberg provides a variety of factoring solutions to clients ranging from small, privately-held companies to publicly-traded corporations with sales ranging from $5 million to over $500 million, including manufacturers, wholesalers, and service providers:
- Advance Factoring – Milberg provides accounts receivable credit protection, collections and bookkeeping services, and borrowing as a percentage of accounts receivable.
- Collection Factoring – Milberg provides accounts receivable credit protection, collections and bookkeeping services for assigned accounts receivable.
- Deferred Purchase – Similar to collection factoring, Milberg provides accounts receivable credit protection, collections, and bookkeeping services for assigned accounts receivable, but only takes title to the receivables when an account debtor goes bankrupt or is financially unable to pay its bills.
- Non-Notification Factoring – With this option, Milberg only provides credit protection for the accounts receivable; the client company remains responsible for all collections and back-office support.
“Factoring offers a viable and flexible source of liquidity and credit protection in both prosperous and challenging economic times,” adds Dan Milberg. This holds especially true for companies seeking more financial support than their banks are able to provide due to their required policies and regulations. Factoring accounts receivable can also reduce overhead expenses and convert fixed costs to variable costs through the outsourcing of the credit and collections functions.
For over 80 years, Milberg Factors has been a dedicated financial partner to its clients, committed to providing them with the financial resources and personalized attention they need to grow, prosper, and in times like these, sustain their businesses. Milberg understands the varied challenges your business may face, particularly now in the midst of the COVID-19 crisis and the collapse in economic activity, and how best to respond to them.
For more information about Milberg Factors, Inc. and how a factoring arrangement may be able to help your business, please contact Daniel R. Milberg at (212) 697-4200, David M. Reza at (818) 649-8662, or Ernest B. White at (336) 714-8852, or email us at firstname.lastname@example.org.