1. What is Factoring?
  2. Will factoring benefit my company?
  3. What size clients does Modesto Factors serve?
  4. Do you have any restrictions as to the location of Modesto Factors' clients?
  5. What about the location of the clients' customers?
  6. Do I have to factor all my invoices?
  7. Will Modesto Factors purchase all invoices I send in?
  8. Are my receivables liened as collateral?
  9. Does Modesto Factors require additional collateral?
  10. Do I have to sign a personal guarantee?
  11. What is the difference between factoring invoices on "non-recourse" versus factoring invoices "recourse"?
  12. Does Modesto Factors only factor invoices on "non-recourse"?
  13. How long do I have to commit to factoring my invoices?
  14. Do I have to pay a fee to get started or for you to process my application?
  15. How long does it take to process my application?
  16. Do I have to be an established business, operating a minimum number of years, to be approved?
  17. What types of businesses do you factor?
  18. How and what do you charge for factoring my invoices?
  19. How will I know the status of my factored invoices?
  20. How do my customers know where to send payments?
  21. How do I receive my money from the factored accounts?
  22. When do I receive the monies?
  23. Can you supply me with references from existing clients?

Q: What is Factoring? Back To Top A: Factoring is the purchase of accounts receivable for immediate cash. Factoring gives businesses the power to ensure growth without diluting equity or incurring debt.

Q: Will factoring benefit my company? Back To Top A: Factoring can be extremely beneficial to your company when managed properly. Expanding sales, purchasing inventory or raw materials in bulk are examples of factoring benefits. With a factor your company avoids such expenses as mailing costs, losses on bad debt and allows you to take advantage of early pay discounts from suppliers (i.e., 2%/N10). Your FACTOR basically becomes your credit department - a very experienced credit department!

Q: What size clients does Modesto Factors serve? Back To Top A: Modesto Factors does not have minimum requirements. We factor companies with as little volume as $3,000 through a special program called Modesto Factors Expre$$, which is designed for companies that have less than $50,000 in open invoices. For larger clients we are able to go as high as $1.5 million with our other programs such as accounts receivable financing and asset based lending.

Q: Do you have any restrictions as to the location of Modesto Factors' clients? Back To Top A: No. Modesto Factors is a nationwide commercial finance company.

Q: What about the location of the clients' customers? Back To Top A: Modesto Factors purchases credit-worthy invoices from anywhere in the US and Canada. Modesto Factors also purchases invoices from other countries on a case-to-case basis.

Q: Do I have to factor all my invoices? Back To Top A: Absolutely not. Modesto Factors realizes that you may not want or need to factor all your invoices. For that reason Modesto Factors' program leaves you free to decide which accounts to factor and which to keep in house.

Q: Will Modesto Factors purchase all invoices I send in? Back To Top A: Modesto Factors will try to purchase all the invoices that you submit. Because we buy original invoices on a non-recourse basis, we are making a credit decision. Modesto Factors will purchase each invoice based on its credit-worthiness. We will establish internal credit limits for your customers. You will be informed when we start factoring your invoices which of your customers we will purchase and which ones we will not purchase and why. Going forward, any new account you wish to factor can be submitted ahead of time for pre-approval by Modesto Factors.

Q: Are my receivables liened as collateral? Back To Top A: Yes. Modesto Factors requires a first position on all accounts receivable while you are factoring. There are instances when Modesto Factors may be working in conjunction with a bank, and in these cases the bank would need to subordinate a portion of the receivables or all of them, depending on the needs of each client. In many cases the combination of bank financing and factoring works quite well.

Q: Does Modesto Factors require additional collateral? Back To Top A: No. Within our traditional factoring programs, a first position on accounts receivable is all that Modesto Factors requires.

Q: Do I have to sign a personal guarantee? Back To Top A: Yes. Those persons who are responsible for the ownership of the company are required to sign a personal guaranty. The "Continuing Guaranty and Waiver" document protects Modesto Factors against fraudulent business practices. All documentation used by Modesto Factors is common throughout the factoring and commercial finance industry.

Q: What is the difference between factoring invoices on "non-recourse" versus factoring invoices "recourse"? Back To Top A: When an invoice is factored on a "non-recourse" basis the Factor takes the credit risk of the account debtor, thereby protecting the client from credit loss. When an invoice is factored "recourse" it means that the client is ultimately responsible for payment, regardless of whether the account debtor pays or not.

Q: Does Modesto Factors only factor invoices on "non-recourse"? Back To Top A: The vast majority of invoices Modesto Factors buys are "non-recourse". However there are times when you may want us to purchase copies of invoices that have already been mailed (many new accounts are like this). Any time Modesto Factors buys invoices that are not originals and have already been mailed by our client they are purchased on "recourse".

Q: How long do I have to commit to factoring my invoices? Back To Top A: On our standard factoring program there is no minimum term contract. Once your cash flow has improved or you have access to traditional forms of financing, simply stop sending invoices at no penalty whatsoever. It is only in our more advanced programs and non-standard products where you run into minimum term contracts, and generally the term is six months.

Q: Do I have to pay a fee to get started or for you to process my application? Back To Top A: No. Modesto Factors has no start up fees at all. It costs you nothing but the time it takes to fill out the application and gather the supporting documents.

Q: How long does it take to process my application? Back To Top A: Normally between four and seven working days is enough to get a customer their funding. We are generally able to give preliminary approvals within 24-48 hours via a term sheet that details the basic terms of factoring. Keep in mind that there is a verification process that Modesto Factors must perform on the invoices that are submitted to us for financing. In some cases the time required to verify these invoices is the driving factor behind getting the funding in a timely manner.

Q: Do I have to be an established business, operating a minimum number of years, to be approved? Back To Top A: No. Modesto Factors prides itself on catering to the financing needs of small to medium size businesses that are recently founded. Even pure start-ups are not a problem in most cases, as long as the accounts receivable are straightforward (i.e., not guaranteed sales, progress payments, etc). Modesto Factors routinely finances start-ups, companies that are recently unprofitable or have wild swings in their business cycle, and even ones that need assistance in dealing with tax issues. Businesses that do not qualify for bank financing are the lifeblood of Modesto Factors.

Q: What types of businesses do you factor? Back To Top A: Modesto Factors serves a wide range of industries, including trucking, temporary personnel agencies, printing companies, manufacturers, wholesalers, and many service industries such as janitorial and armed guard services. Most any business that sells a product on terms not exceeding 60 days can use factoring.

Q: How and what do you charge for factoring my invoices? Back To Top A: Modesto Factors' traditional factoring program advances between 70% and 95% of the face value of invoices, depending on the industry in which the client works. Larger volume accounts that are under the "Premier" program or are doing accounts receivable financing have advance rates not exceeding 85% of face value. When an application has been processed, it will then be determined which program best fits the needs of our client. The rate is driven by two main issues: first, the time it takes for an invoice to actually be paid, and second, the volume you submit during the calendar month. The minimum and maximum rates are 2% - 9% discount on face value of invoices. Again, a term sheet will be issued specifying the actual rates that are anticipated.

Q: How will I know the status of my factored invoices? Back To Top A: Once a month you will receive a computerized aging of all activity regarding your factored invoices. You will have a record of the day funds were advanced on each invoice and the date on which each one is paid off. In addition, you will be assigned an Account Executive at Modesto Factors that you can contact via an 800 number. You are encouraged to call your AE any time there is a question regarding the status of your account. Every time you send invoices in for financing, a copy of the "Schedule of Accounts" will be sent to you after the funding, and on this copy there will be the detailed information regarding each "funding".

Q: How do my customers know where to send payments? Back To Top A: When Modesto Factors purchases an invoice, it is stamped with our address before being mailed to the customer.

Q: How do I receive my money from the factored accounts? Back To Top A: You have a few choices that you may elect to change at any time. Modesto Factors can wire funds to your account, send a check through FedEx, or we can simply mail your check via US mail. In some cases, if your bank has a branch near our operations office we can deposit the check directly into your account (thereby saving the cost of the wire or FedEx). Currently, we make daily bank runs to Bank of America, Wells Fargo, Union Bank of California, and City National.

Q: When do I receive the monies? Back To Top A: Modesto Factors funds all invoices submitted on pre-approved debtors within 24 hours of receipt. If the debtor has not been pre-approved for purchase, we will try to fund those invoices as fast as possible, usually within 24 hours as well. This kind of quick turn around is the reason many businesses use Modesto Factors. This is also why Modesto Factors has become the largest privately held factoring company in North America, and the reason we are viewed as the industry leader.

Q: Can you supply me with references from existing clients? Back To Top A: Yes. Modesto Factors is proud of the service we offer and are more than happy to provide references once we have received a completed application package.

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