Bank Financing vs. Receivables Factoring
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- čas přidán 11. 09. 2024
- www.driveyoursu... Costs of financing receivables with a bank versus receivables factoring. The video breaks down how to compare costs and how to use a sample excel spreadsheet on www.driveyoursuccess.com that compares financing with a bank versus financing with receivables financing.
I’m due to start my first start up in April next year, a business model focusing on deliberately paying suppliers early in order to get a commercial edge on the competition (lower fees, improved reputation etc) and have been researching the purchasing of receivables for a few weeks. Your final summary echoed my own thoughts, ‘’keep some accounting in-house (for those debtors who pay on terms... and use factoring for the rest). By doing this as a startup (being able to survive on lower gross profits per project than hey can) I think we can compete against larger organisations who are stuck in highly traditional cash-flow models. Very well explained in this video, fascinating stuff.
Thanks for your feedback. Much appreciated. Banks aren't the only source of financing and combining financing options and sources is often the best alternative to maintaining positive cash flow. .
How was it been?
@Mingtye Really good thank you. It was not easy to begin with as we had a handful of clients. But we've grown well without overextending ourselves.
We only factor one large US client, the rest (all Europe) we handle in-house.
@saelaird can you please share your contact info ? Maybe there is a possibility of collaboration
Awesome Video! Thank you for taking the time to post!
I work with a commercial bank for SME and we do the factoring for some of the gov projects to finance 80% of projects proceeds including acknowledgment of assignment proceeds + mang fees + floating interest rates
Great explanation. Good job explaining the differences. Thanks!
Thanks Bryan.
Ian, good job mate!
I'm considering in factorize the next night out with them lads.
Would be an-opener for many . One doubt ? Customer pays 12000 $ advance which is with the supplier and is earning interest . To be factual , the difference between earned interest from advance( $ 12000) and interest for amount to be paid ( 3000 $) need only to be taken . Appears to have an anomaly . Please clarify . Thanks for the video . Credit control has become very vital as oustanding are ever increasing and risk is always present .
great explanation!
great info
Great job with the video
I did not like the calculation.
10000*.0164=164
12000*.0164=1.97
Would u pls clear the confusion?.
Thanks!! This helped a lot!! :-)
No problem. Take care
What happened to the 3000.00 leftover from the 15k?
I would like to learn about factorising receivable yet it too complicated to me, what would be a bridge topic to study before going into this topic. Many thx
I would start with the basics of finance. You gotta understand what are accounts payables, accounts receivables, and their implication to working capital first.
Data manipulation. Be carefull. 1. Compared COGS of 10k with 12k (0.8*100%recievables). In this case margin is 50% and I am wandering what is this business type do we speak about? Average margins for FMCG (who are the most common users of factoring) 10-15% max. So the basis for calculation is uncomparable. 2. Banks charges admin fees by default. it is not 1% of course, but it is one time shot fees for any loan facility given (Credit Line, OVD, etc.,), that have to be allocated to each money use case. And 1% for Factoring is to high, 0.2% whould be ok. Again, uncomparible stuff... 3. Banks in 80% ask for collateral, insurance, etc., and there is no expences shown for this items, so manipulation!
I am factoring my invoices but don't have a clue how to do the journal entries to reflect the advance, the reserve and the finance fee. Can someone help me? Thanks in advance.
You need an accountant for that.
@@Driveyoursuccess Thanks ! 👍
Great
Why is COGS $10 000 on the left, but the recievable is 15 000 on the right?
Receivables are sold at selling price not cost
Receivable better be higher than the COGS. The delta is your “gross profit”. ROI May vary...8%, 12%, etc.
please i will love if you can give me a company for my shoes business i have sent my samples to the sales person from australia to nyc i have stores placing orders and the orders are pretty big so help me out whats next i am looking for factor company if you can help will be great give me your number
Leonel Gonzalez Hi Leonel. send me an email at ijamesjohnson@yahoo.ca