High Receivables

[Leo Firth]

I have read some discussion how alot of appraisers receivables are really high now. Has anyone tried factoring their receivables? You can get a check in 3 days on all the work you have completed, once your setup. It's like running a COD business.

 

[TEL2002]

I guess I'm on the unknowing side of the house...what the heck do you mean by factoring receivables is like COD's. Please give more detail for those of us that are not enlightened. (as the ole saying goes, speak slowly and use small words.)
Thanks, I am curious what you are talking about.

 

[Jeff Horton]

I second TC, speak english.

 

[Leo Firth]

factoring Recivables is selling your receivables at a discount. A Factor advances cash on your receivables at a rate of 75-95 cents on the dollar, he in turn waits to collect the payment on the invoice. Rates vary, net 30 is 5% net 40 can go to 5.5% factoring has been around for about 500 years. Banks sometimes will advance cash on your receivables. But not very often. You receive a 75-90% advance on your inovice. Depending on who is paying. When the factor receives payment on the invoice. You receicve the balance less his fee. The day you create an invoice, you can sell it for cash. Most factors like $10,000 plus a month, It's not worth their time for less than $500 month.

 

[Leo Firth]

I stand corrected, you can sell your receivables for as low as 2% net 30 and no minimuns and 100% advance.

 

[Steve Wyrick]

Hi Leo,

Correct if I am wrong but isn't this factor a loan, secured by receivables with a fee instead of interest. What happens if the recievable is never collected? Who is responsible for collection. At 2% over 30 days, 24%/year nice interest if you can get it.

 

[Leo Firth]

Steve, no it's not a loan your credit has nothing to do with it. You sell the right to the factor to collect payment. The credit of your customers is what counts. it's like selling a Mtg at a discount/ The factor invest money up front and receives his profit later when the invoice is paid. 24% a year is low it use to be 60% a year on you money. The factor does the collection and eats the invoice if not paid and takes the loss. A lot of companys do it, it gives them even cash flow.

 

[Michael Reilly]

Leo,

On average we have a 1/2 mil on the street and we have talked to several Factor's. In the markets we are in no factor eats an invoice, the percentages are very high and the way they conduct business I wouldn't want them dealing with my clients! Plus it looks cheesy, sort of like you can't get that portion of your business together IMHO

MReilly-NY
ACE.....Speaking of ACE what ever happen to Appraisers for Consumer Education site? Looks like no activity, no plan and no interest.

 

[David Riggs]

Michael,

That is a good qustion, Where is ACE? Perhaps those that were running the show give us an update?

 

[Michael Reilly]

David,

It's quite obvious that most have been very busy but maybe with the jump in rates and the slow down in refi activity there will be more time devoted to the program. I had a strong interest in the early stages and still do but without a sound plan and true commitment I wouldn't hold your breath counting on things to develop more quickly.

MReilly-NY
ACE