What is meant by Non Recourse Invoice Factoring?
Do different factoring companies have different definitions of the Invoice Factoring of Receivables Without Recourse? What is Recourse vs Non Recourse Factoring? And most importantly, how do I protect myself and my company from the “Nuclear Option”?
Statistics show that less than 20% of Accounts Receivable Financing Companies utilize credit insurance as part of their Non-Recourse Invoice Factoring product. Why is that number so low? First, you have to have a strong balance sheet and credit culture to qualify as the large insurers who offer credit insurance have very strict guidelines. Paragon passes both hurdles with flying colors. Secondly, it is not an inexpensive investment. However, Paragon being entrepreneurial just like our clients feels it is the right thing to do.
Why do we feel strongly about utilizing credit insurance and passing on the benefit to our clients in the form of Credit Protection? In business there is only one thing worse than no sales and that’s selling it and not getting paid. Let’s answer the important questions about credit protection and non recourse factoring.
Key Factors to Consider about Credit Protection via Non Recourse Invoice Factoring:
- What is the Factoring Company’s definition of Non Recourse? At Paragon we become your defacto credit department (we like to brag you get a free Credit Manager with Paragon). Each one of your customer’s will have a predetermined credit limit: $20,000-$1,000,000 for example. What we advance you plus the factoring fees will be covered for bankruptcy protection via our policy. We will always pre-approve your customers before we fund your invoices. Your salespeople will have a preapproved list on who to solicit for new sales. No wasting time on potential clients who don’t pay their bills. In addition, as your clients make payments on a regular basis with great credit history we can raise their credit protected limits.
- What isn’t Covered under Non Recourse Factoring? At Paragon, our product gives you Working Capital, Credit Protection and AR management. You are in charge of keeping your customer happy. A big part of Accounts Receivable Management is confirming that your customer is satisfied with your service and product. Just like you, we want your customer’s quality, quantity and timeliness needs met. Of course that is your job. Hopefully our services will let you concentrate on meeting your customer’s needs since we have alleviated your credit and working capital issues.
- What if My Customer just doesn’t Pay Me? This is a question we hear from time to time and the million dollar answer is… Why? Creditworthy customers who have a history of paying their bills on time typically don’t turn bad overnight. Something is going on. Improper paperwork? High return rate? Staff turnover? Fortunately Days Sales Outstanding (DSO) typically goes down for our new clients as the AR Management and Invoice Verification process reduces errors and speeds up the Accounts Payable Department steps.
- What if My Customers just Pay Slow? That is a great question and the answer is… We are OK with Slow Paying Customers as long as they pay within 75 days (and we understand some industries like Oil & Gas can take longer) and we can get credit insurance on them. Again, it is all about protecting your business (and ours).
- What is the “Nuclear Option”? Your largest (or only) customer goes bankrupt… Paragon like you wants to live to fight another day. A&P, Kodak, General Motors, Radio Shack, Linens n Things, Circuit City, Blockbuster, Adelphia; the list of huge, once healthy companies filing bankruptcy is endless. That is why we can credit protect you and the value we place upon it contributing to your company’s health and survival.
Money When Your Business Needs It Most!™
One of the most frustrating things in the US is having a high growth business but dealing with legacy unpaid taxes or tax liens. It is very difficult to deal with your finance needs with the unpaid tax albatross hanging around your businesses neck. However, for 21 years we have been helping businesses get the working capital they need who have unpaid taxes or tax liens.
A few things that separates Paragon from other AR Funding & PO finance companies:
1) Is this their area of expertise? For 21 years we have been negotiating with the IRS on the client’s behalf. And many times, we have been funding clients even before a tax payment plan is in place.
2) What is their experience dealing with the IRS or other tax agency? Bureaucracy and the complications of the tax code can be very difficult. We have contacts inside the IRS and we have professionals internally with the proper knowledge.
3) Speed is critical and our tax group is built to get you funding fast.
For fast, secure funding even with tax issues, please call Chris Curtin, National Sales Manager at 888-400-5931 ext 1.
Money When Your Business Needs It Most!™
Choosing the best manufacturing finance company can be a daunting task. There are many complex factors that come into play and knowing the ins-and-outs isn’t easy. Discussed below are several of the major issues that need to be understood in order to select the right finance company for your specific business needs. Sometimes the best solution to your manufacturing finance needs is not always the easiest or most straightforward solution.
Let’s take look at critical variables when choosing a manufacturing finance company:
Your Specific Industry
A financing company that understands all the nuances within your manufacturing sector has many critical benefits to you. Heavy industry manufacturing processes in metal, oil and chemicals vary greatly compared to clothing and textiles or food production. Each of these manufacturing processes are also unique in the way they are bought, sold and financed. It’s crucial that the finance company has deep expertise in your manufacturing process and best industry practices to help optimize efficiency, accuracy and profitability. The best financing company will help increase lead time, time to market and minimize supply chain disruptions. With over 21 years of experience, Paragon Financial has deep industry expertise dozens of industries and manufacturing processes.
Minimum Revenue and Deal Structure
The exact amount of working capital you need and when you need it is critical in saving your manufacturer cash. For example, do you need to advance a full 1 million dollars immediately or can you do the initial design and engineering with $500,000 and take the balance at a later date. Analyzing the structure of how your lending package is scheduled can save you interest points and working capital.
Each financing company has different levels of risk they are willing to take on. Make sure you understand these limits when researching finance companies. Lending companies typically have minimums based on your manufacturer’s yearly revenue. They will also have maximums based on the type of clients they are willing to fund. Our typical client has sales between $30,000 and $3,000,000 per month.
Your Personal and Company’s Credit
Having poor personal or business credit can often be a non-starter when discussing a loan with your bank. Only 27% of businesses obtain financing through bank loans. What are the options? Factoring companies focus much of their approval process on the credit of the manufacturers buyers, not your own. This allows you to leverage profitable opportunities and get the funding you need in order to buy raw material, pay for labor, new training or buy new equipment. Ask your funding source about obtaining a factoring line of credit vs traditional bank financing.
Your Time in Business
Being a startup implies increased risk to a lender. Why would a bank take the enormous risk in loaning to a start-up working capital? Most banks and traditional lenders want 2-3 years of tax returns and solid personal credit of the owners. You can get cash from friends and max out your credit cards, but what happens if things do not go as planned? No business is worth losing friends and family over or risking your home to bankruptcy. When factoring an invoice or purchase order, the time in business becomes a non-factor. At Paragon Financial, we look at the credit worthiness of your buyer to determine risk, not how long you have been in business.
One Time or Long Term Funding Solution?
With anything important in life, creating trustworthy, long-term relationships is critical to your happiness and success. The same goes for finance companies with trust built over time and history. At Paragon Financial, where we are interested in long-term relationships of one year or more. We are fully dedicated to our manufacturing clients from day one or year 10. Some companies will do short-term deals such as spot factoring where you’ll receive an advance on a single invoice without building a trustworthy relationship with the financing company.
The Experience of the Funding Source
It’s said, ‘you get what you pay for’ – this doesn’t necessarily apply to finance companies. An inexperienced finance company will often take on unnecessary risk in order to obtain your business. They don’t have the depth of knowledge in your industry needed in order to optimize efficiency, accuracy and profitability with your financing package. At Paragon Financial, we have been in business for over 21 years, funding over 2 billion dollars to companies just like yours. We know what it takes to build trustworthy relationships with our clients.
The staffing industry has been experiencing tremendous growth and is expected to continue to grow 6% per year until at least 2020. U.S. companies use of temporary labor has reached an all-time high. However, certain industries have been seeing the bulk of that growth.
There is significant growth expected with higher-skilled jobs according to Bureau of Labor Statistics projections in industries such as healthcare, educational services, professional and business services.
Below is a list of the fastest-growing occupations, reported by CareerBuilder, for temporary employment over the next five years.
Among jobs that pay less than $15 per hour, temporary employment is expected to grow in double digits in a variety of areas, including:
Home health aides – 15% growth
Gaming dealers – 14% growth
Child care workers – 14% growth
Restaurant cooks – 14% growth
Substitute teachers – 14% growth
Demonstrators and product promoters – 14% growth
Retail salesperson – 14% growth
Landscaping workers and groundskeepers – 13% growth
Taxi drivers and chauffeurs – 13% growth
Maids and housekeepers – 13% growth
Pharmacy technicians – 13% growth
Bakers – 10% growth
Among positions that pay at least $15 per hour, hot areas for temporary jobs include:
Computer systems analysts – 19% growth
Accountants and auditors – 14% growth
Management analysts – 14% growth
Computer user support specialists – 14% growth
Software developers, applications – 14% growth
Customer service representatives – 14% growth
Heavy- and tractor-trailer truck drivers – 14% growth
Registered nurses – 14% growth
Maintenance and repair workers – 14% growth
Machinists –13% growth
Construction laborers – 13% growth
Secretaries and administrative assistants, except legal, medical and executive – 13% growth
Are you a high growth staffing agency in need of working capital? If so, please call Toll-Free 888-400-5931. For 21 years Paragon Financial has been providing working capital solutions and credit protection to staffing agencies and we look forward to helping you grow.
To succeed in today’s global marketplace and win sales against foreign competitors, exporters must offer importers attractive sales terms supported by the appropriate payment methods. Getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer.
Paragon Financial has been funding exporters and importers since 1994. We work with your company to help ensure a successful and profitable transaction. Give us a call at 888-400-5931 today, fill-out the form to the right or chat with us.
Listed from least risky to most for the seller:
Time of Payment
Available To Buyer
– relies on seller to ship exactly the goods expected, as quoted and
goods must be special in one way or another, or special circumstances
prevail over normal trade practices (example, goods manufactured to
payment not honored, goods must be returned or resold. Storage,
handling, return freight expenses may be incurred
shipment but not content, unless inspection or check-in is allowed
to the seller is assured if the transfer of funds is confirmed prior to
buyer taking possession of the goods.
OF CREDIT (See next two items.)
Invoice must match the Letter of Credit exactly. Dates must be
carefully headed – “Stale” documents are unacceptable for collection.
of Credit require total accuracy in conforming to terms, conditions,
shipment is made, documents presented to the Bank
the seller a double assurance of payments – Depends on the terms of the
letter of credit.
shipment is made but relies on exporter to ship goods as described in
documents. Terms may be negotiated prior to letter of credit agreement,
alleviating buyer’s degree of risk.
inclusion of a second assurance of payment (usually a “reputable” Bank)
prevents surprises, adds assurance that issuing bank has been deemed
acceptable by confirming bank. Adds cost and an additional requirement
has single bank assurance of payment and seller remains dependent on
foreign bank. Seller should contact his banker to determine whether or
not the issuing bank has sufficient assets to cover the amount.
can be changed only by mutual agreement, as stipulated in a sales
agreement. Becomes open account with buyer’s bank as collection agent.
Foreign bank may have problems making payment in sum or timeliness.
BILLS OF EXCHANGE (See next two items.)
time from buyer’s bank to seller’s bank may still take one week to one
by design, should contain terms and conditions mutually agreed upon
draft may be written with virtually any term or condition agreeable to
both parties. When determining draft tenor (terms and conditions)
consult with your banker and freight forwarder to determine the most
desirable means of doing business in a given country.
Draft (with documents against acceptance)
presentation of draft to buyer.
payment to buyer’s bank.
draft not honored, goods must be returned or resold. Storage,
handling, return freight expenses may be incurred.
shipment but not content, unless inspection or check-in is allowed
draft can be a collection instrument used to exchange possession and
title to goods for payment. Seller is essentially drawing a check
against the bank account of the buyer. Buyer’s bank must have
pre-approval, or seek approval of the buyer prior to honoring the
check. Payable upon presentation of documents.
Drafts (with documents against acceptance)
maturity of the draft
payment, after acceptance
on buyer to honor draft upon presentation.
shipment but not content, time of maturity allows for adjustments, if
agreed to by seller.
based upon the acceptance of an obligation to pay the seller at a
specified time. Although a time draft has more collection leverage than
an invoice, it remains only a promissory note, with conditions.
agreed, usually by invoice
completely on buyer to pay account as agreed
terms of payment, including extra charges and terms should be mutually
understood and agreed upon prior to open account initiation. Companies
conducting on-going business are candidates for open account terms of
payment. Seller must measure not only buyer’s credit reliability but
the country’s as well.
Chart source: mushroomstrade.com
Huge institutions, brokerages and even asset managers have a stealthy new competitor and trillions of dollars are at stake. We have all seen major disruption in content distribution and travel from Netflix to Uber. The new major disruptive technology is coming from the financial sector and it’s known as ‘Fintech’.
We at Paragon Financial like the definition proposed by the Wharton Fintech Club:
Fin·Tech noun : an economic industry composed of companies that use technology to make financial systems more efficient.
Fintech companies, entrepreneurial start-ups, are producing innovative online businesses that can dramatically improve the customer experience, realigning old, archaic systems with the newest technologies. Financial services such as lending, payments, insurance and institutional investments, equity financing, and remittances are all at risk. The small, nimble and smart IT start-ups are beginning to disrupt these historic financial markets and big business is starting to react.
“There are hundreds of start-ups with a lot of brains and money working on various alternatives to traditional banking,” JP Morgan CEO Jamie Dimon wrote in the letter to investors regarding Fintech competition. In January, Goldman Sachs completed research that shows alternative lenders generated 62% of all small-business loans, versus 21% by big banks. Goldman warned that the threat could cost banks 4.7 trillion in revenue and 470 billion in profit. “Right now we’re in the awareness phase,” said Anand Sanwal, CEO of CB Insights. Companies that fail to act risk “death by a thousand cuts,” he added.
“Paragon Financial stays ahead of the curve with a cloud-based 24/7 client reporting dashboard, a real-time web interface and a secure online application. We continue to develop systems to empower our clients, prospects and referral sources,” said Chris Curtin, Paragon Financial’s National Sales Manager.
If you have debt to the IRS, obtaining financing or working capital for your business is difficult at best – unless you work with a funding source that can help fix your tax issues and provide the necessary working capital at the same time.
Factoring tax issues is a working capital solution many did not know was an option. Paragon Financial is ahead of the curve in dealing with the back-taxes problem. We have access to up-to-date information on IRS liens, levies, tax compliance history, business name discrepancies, accrued tax liabilities, and IRS installment agreements – every relevant piece of information we need to ensure that there is no risk of your receivables being taken by the IRS to fulfill back-tax obligations.
For 21 years, Paragon Financial Group has been factoring tax issues and providing working capital solutions.
Give us a call at 888-400-5931 today, fill-out the form to the right or chat with us.
From Houston, Texas to Philadelphia, PA staffing agencies are growing tremendously. For example, temp staffing firms in Houston are reporting up to a 74 percent growth in local billable hours in 2014. With exponential growth, comes a greater need for working capital to hire new employees, fund payroll, benefit premiums and much more.
Paragon has been providing Payroll Funding to the security guard staffing industry for over 21 years. We understand the demands rapid growth puts on cash flow and offer up to 92%, same day—wire transfer, advance against invoice for our temp staffing, payroll funding clients. Paragon has built its reputation by offering the best customer service possible. This coupled with our competitive rate structure has helped Paragon become one of the premiere factors in the U.S.
Paragon Financial has been working capital to the guard staffing industry since 1994. All through our accounts receivables financing, credit protection and invoice factoring programs. Give us a call at 888-400-5931 today, fill-out the form to the right or chat with us.
Temp jobs in the US are booming with a 57 percent increase from 2009 to 2014. This means staffing companies are also feeling the boom. A growing staffing company equals an increased need for working capital, higher payrolls, and larger overhead overall. Nearly 3 million people are employed in temporary jobs from Lakeland, Florida to Omaha, Nebraska.
Analysis from CareerBuilder shows that number will continue to rise. Temporary employment is expected to increase 13 percent (354,877 jobs) from 2014 to 2019. Staffing agencies need to be financially prepared to handle the additional workload.
CareerBuilder put together a list of fast-growing occupations for temporary employment. Hot areas for temporary employment include the following with the total number of higher paying temp jobs listed:
Computer Systems Analysts
Accountants and Auditors
Computer User Support Specialists
Software Developers, Applications
Customer Service Representatives
Heavy and Tractor-Trailer Truck Drivers
Maintenance and Repair Workers, General
Secretaries and Administrative Assistants, Except Legal, Medical, and Executive
Computer user support specialists provide support and assistance to individuals and organizations using computer hardware and software. From Baltimore, Maryland to San Antonio, Texas these temp jobs have seen a 47.8% in year-to-year hiring according to new research by WANTED Technologies.
“Staffing firms are being hired to fill excess jobs that HR teams can’t fill internally either due to overall challenging conditions or lack of internal recruiting time and resources especially for these jobs with niche skill sets,” said Meredith Amdur, president and CEO of WANTED Technologies.
17,895 computer user support specialist temp staffing jobs were added between 2013 – 2014.
Computer user support specialists have the highest salaries in Connecticut, where they earn an average compensation of $60,200. Employees who work in this job make the most money in Mining, Quarrying, and Oil and Gas Extraction, which has average pay scales of $60,610.
For over 21 years, Paragon Financial has helped successful staffing companies grow their business through payroll financing, invoice factoring, receivable financing, AR management and credit protection.
Give us a call at 888-400-5931 today, fill-out the form to the right or chat with us to find out how we can help you.