Working Capital

What is Invoice Discounting?

Invoice discounting is an internationally accepted financial service that dates back generations. It is a relatively simple process that involes the sale of an accounts receivable, represented by an unpaid invoice, at a price of less than the face value of the invoiced amount.

Because invoice discounting often involves the purchase of select accounts receivable, without long-term commitments or recurring monthly minimums, it is sometimes referred to as "spot factoring".

Long cash conversion cycles may result in working capital shortages

A supplier's invoices for goods and/or services usually have 30-day payment terms. However, suppliers often find that their customers actually take 40-45 days to pay their invoices. During this 40-45 day waiting period, the supplier is effectively financing their customers through its accounts receivable.

As a result, the more business a supplier does, the more working capital the supplier needs, because very new sale and delivery ties up working capital tied by a new accounts receivable.

At times, a supplier may find that is has so much working capital tied up in accounts receivable that it does not have sufficient funds to pay the costs to manufacture or acquire additional goods, to pay employees or contractors to provide additional services or to make critical capital investments. One solution is to turn to a bank or "full line" factor. However, a supplier sometimes does not have access to these conventional lending sources because, in the case of banks, they do not have a sufficently long operating history, a strong balance sheet, a good credit history, or in the case of factors, they do not have sufficient volume of accounts receivables. Or perhaps the supplier knows that its cash flow problem is short term, and it is not interested in committing to a financing solution that will involve financing charges over the long term.

An obvious alternative solution is for the supplier to convert certain accounts receivable into cash, into working capital needed to finance the next sale. This is the solution that Future Acceptance provides.

The Future Acceptance Solution

Future Acceptance helps you, the supplier, turn your quality current commercial accounts receivable into ready cash. Our solution essentially converts a sale with 30-45 day payment terms into a "cash on delivery" sale. As a result, you have the funds needed to financeyour next sale immediately, not 30-45 days later. You can thereby increase your sales and revenues, accelerating your growth.

Our invoice discounting solution provides you with a unique, user friendly, "use it as you need it" financing alternative. Out service gives you, our client, control. You determine how much you use our solution. We have no long-term commitments and no recurring monthly minimums. You sell us accounts receivables only when you need ready cash. You do not have to sell us a minimum amount of receivable each month, or sell us receivables every month for a one or two-year contractual period. If you need only a one-time funding, we can provide it.

If you are a supplier of goods and/or services with a working capital problem, consider the Future Aceptance Solution. Contact Us today.