Factoring Facts
Expand your Government Business at Capital Monterey
Thank you for visiting us at Capital Monterey’s website. Our purpose is to always serve you in a timely and professional manner. To best serve your needs, please answer the following questions and send it to us. As always, all requests are confidential.
Frequently when prospective accounts receivable factoring clients compare factoring to traditional automobile, business inventory or mortgage lending rates, invoice factoring can appear expensive. Most prospective clients tend to annualize the points charged, equating 3% per month to an interest rate of 36%. This is not the correct method. It is an incomplete and incorrect comparison.
Factors purchase accounts receivable at a discount. They do not lend money. Receivable is short-term & management intensive whereas a bank loan, is secured against a stable asset or several assets & in most cases advanced once. Factors are continuously advancing and collecting accounts receivable, providing clients with ongoing reports, credit due diligence, and personalized account management services.
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When factoring prospects make this comparison, Capital Monterey ask them to look at the amount they offer for early payment. If the standard 2% discount for payment within 10 days is annualized using the thirty-six 10 day periods in a year, they have lost 72% interest.