How Can Factoring and Banking Work Together?

The success of your company is dependent on reliable and efficient cash management. At times, bankers are unable to provide the cash management that is needed for your commercial transaction. They may not have the ability to approve a borrowing request for various reasons, even to an existing client. 


Some of these reasons include:

  1. Receivable Concentrations
  2. Overextended
  3. Under Capitalized
  4. Growing Quickly


There are various other reasons, but in these situations, the bank still has the opportunity to help their client or prospective client. The least they can do is refer them to factoring.

Factoring or invoice factoring is a financial transaction that is business to business. It is when a business sells its accounts receivables to a factoring company at a discount rate. The business owner sells their account receivables in the form of an invoice to the factoring company. The factoring company will then advance up to 90% of the face value of the face invoice amount. The factoring company collects the full amount from the customer in due course and pays the balance amount due to the business owner after deducting the discount fee for the services rendered. 

Factoring enables a company to receive cash faster, instead of waiting for 30,60, or 90 days on payment for its customers. Unlike banks, factoring companies base invoice repayment on the debtor, not the client. Therefore, they can offer funding solutions to unbankable, undercapitalized, and finance-strapped businesses like-start ups and growing entrepreneurs. 

It can be a win-win if a bank and a factoring company choose to work together. The factor can handle their credit needs while their existing bank can continue to provide depository and treasury management services. 

Why work with Alliance One LLC? 

The Alliance One LLC difference is our belief in building friendships along with assisting you in building your business. We have over 40 years of experience in the financial markets and we are well-capitalized. 

 Since we are privately owned, we have the ability to customize a financial program that fits your needs, not ours. You just need to sell us ONE invoice every 60 days, for any dollar amount. 

 We do not sneak hidden fees in our agreements, and we have a simple four-page agreement with no legal tag lines. 

 You worry about your business, we make sure you will always have the money you need to run your business!


For more information, contact us today.