![]() ![]() ![]() “As a printing business, we paid our suppliers by check,” Owens explained. Moving to a digital business model was a smart decision for DX Marketing, but it meant that on top of being unable to borrow against capital assets, they also had to start paying a lot of their expenses faster. Discovering AR Funding was just a lifesaver.” “To lose the bank’s backing at a critical pivot in our business was devastating. They had all the forms ready and a process in place so that getting our clients on board was easy.” But AR Funding made it really simple for us. “We were a little nervous about the process at first, because our customers had been paying us directly by either checks or ACH transfer for so many years. In June 2019, the line of credit was paid off in full, and DX Marketing has never looked back. AR Funding came up with a creative solution: after evaluating the quality of DX marketing’s customers, they issued the first funding draw at a higher-than-normal advance rate so that DX Marketing could pay off the bank sooner. The plan hit a snag when it came time to pay off the bank, because DX Marketing’s line of credit was larger than the amount of their total accounts receivable. When a friend recommended Associated Receivables (AR) Funding, they decided to apply. Without those fixed assets, the bank was no longer willing to extend or increase DX Marketing’s line of credit to support their growth, despite their healthy, increasing accounts receivable.ĭX Marketing quickly started looking into alternative sources of funding and realized that they could use their growing accounts receivable in place of physical assets. “Whenever we needed credit, we always had a lot of fixed assets to borrow against.”īut when the company sold off those assets and invested the funds in their growing digital business, it changed their long-standing relationship with the bank. “As a print shop, we had lots of big printing presses on the floor,” explained Ray Owens, CEO of DX Marketing. But they soon discovered that their decision had an unexpected impact on their working capital. Print-based advertising was slowly being replaced by digital marketing, and in 2017, the company decided to sell their printing presses and embrace the new medium. Due to the higher risk, discounting is typically used by bigger companies with a turnover of around £100,000+ and who have creditworthy customers.When DX Marketing decided to pivot to a new business model, they had no idea how challenging it would be-or how important invoice factoring would become to their success.Īfter nearly 25 years, DX Marketing knew that it was time to evolve the business. Without credit control from the lender, businesses are taking more of a risk by advancing their cash on the invoices.ĭiscounting is riskier because businesses do not have direct contact with their debtors. In factoring, the factor manages the credit control and collection process. Invoice factoring is less risky compared to invoice discounting. Invoice finance is a relatively safe form of business finance – but like anything, there are risks involved. In invoice discounting, these services are not included. Invoice factoring advertising companies full#In invoice factoring, services like full sales ledger and collections service are available. In invoice discounting, the customer pays the company as normal. In invoice factoring, the customer pays the factor-company directly. In invoice discounting, the process is confidential and customers are usually unaware the business is using a financial provider. In invoice factoring, the customer is aware that there is a third party involved. In invoice discounting, the business itself takes responsibility for collecting the invoices. In invoice factoring, the factor (finance company) is responsible for collecting invoices. In invoice factoring, the customer is aware that the invoice is being factored, however in invoice discounting, the customer is usually unaware that the invoice had been discounted. Invoice discounting benefits a company’s working capital and cash flow position as roughly 80% of the advance invoice can be converted into cash. This form of financing is used to help improve cash flow. The lender then gives you the remaining balance after your customer pays the invoice. ![]()
1 Comment
1/23/2023 10:56:20 pm
Amazing write-up! We offer total access to your clients' transactions in real time: you can preview statements, request missing receipts or invoices and manually update our automated expense categorisation.
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