Page 39 - GS170101

Education

This type of factoring is known as non-recourse because It might be difficult to tie in merchant processing directly
the risk of non-payment is on the factoring company to these solutions; however, you can partner with a
after it purchases the receivables. In recourse factoring, finance company to offer them as a value-added service.
the merchant (seller) holds the risk of the receivables Your sales commission from the finance company might
not performing even after the merchant has sold the be 15 percent of the revenue generated. So on a factoring
receivables to a factoring company. deal, if a $25,000 invoice is purchased with a 2 percent
discount rate, the finance company would generate $500,
A/R versus P/O financing and you would be paid $75 (15 percent of revenue) on that
transaction.
Instead of selling receivables, a merchant could choose to
leave them on the balance sheet and use them as collateral Even though A/R factoring has been around for over 400
for a working capital loan. This would fall under a broad years, many companies experience cash flow issues due to
category of asset-based lending and usually be provided the Net D procedure and have no awareness of factoring.
by finance companies like those involved in factoring This presents an excellent opportunity as you rebrand
arrangements. They usually evaluate assets such as from being an MLS leading in with free terminals and
real estate, inventory, luxury cars, art, equipment and, processing rate savings to instead leading with various
of course, accounts receivables and approve about a 70 forms of alternative debt financing.
percent loan-to-value ratio of assets pledged.
Doing so would help you become more of a profit center to
Purchasing order (P/O) financing is used before accounts a merchant, not just a cost center. This is what GS Online
receivables are created, as a merchant might have to MLS Forum Member Dee Malik recently spoke about in a
purchase materials to render services, but not have the forum discussion.
capital to purchase said materials upfront. The merchant
may, however, have an outstanding purchase order for a "After all the success and all the years that we have been a
service a client wants the merchant to provide. part of this space, the merchant looks at us as only a cost
center rather than a profit center," he wrote. "How is that
In this situation, a finance company would advance to the
merchant the capital needed to purchase the materials. Let us help you
Once the merchant receives the materials, renders the
service and collects payment for said service, the finance reach your target
company is paid from a portion of the revenue the audience today!
merchant receives on the transaction.
Targeted Email Custom Video
Selling strategies Campaigns Mini commercials that

If you seek to rebrand to lead in with A/R factoring, A/R Sent to Green Sheet’s focus your services
financing or P/O financing, industries for you to target exclusivemailing list of directly to our industry
would include some of the following, based on the fact that readers working in our
many of these industries bill using the Net D approach: audience.
industry.
• Textiles NEW to GS!!
Resource Guides Spotlight Innovators
• Printing Mini ads that can be seen
Individualized web
• Staffing with print/online/front pages focusing on
page options available. innovators in our
• Security
industry.
• Janitorial
800.757.4441
• Oil and gas
MORE OPTIONS AVAILABLE EMAIL US TODAY!
• Construction DANIELLE@GREENSHEET.COM / RICK@GREENSHEET.COM

• Manufacturing

• Trucking/logistics

• Healthcare

• IT/telecommunications

• Import/export

• Government contracts

39