Factoring Frequently Asked Questions (FAQS)

We believe the ability to deliver long term performance is the true measure of our success.

1) What is factoring?

Factoring is the sale of a client's invoices and accounts receivable at a slight discount in return for immediate cash.

2) How is cash dispersed when a company sells an invoice?

The factor generally will initially advance 75% - 90% of the invoice amount immediately to our selected client and will forward the balance (minus agreed-upon fees) once your customer pays the invoice.

3) Which types of businesses utilize factoring?

* Any type of business can use factoring; however, there are generally three typical profiles:
o Start-ups, or small businesses that do not have much of an operating history
o Businesses that are in expansive and rapid growth phase
o Businesses that have been severely impacted by industry events or the economy

4) Can factoring help me with my cashflow imbalance?

Yes, perhaps the biggest benefit of factoring is that it allows our selected clients to evenly match their fluctuating cash inflows and outflows. Slow paying customers can frequently cause a working capital mismatch, especially when a businesses suppliers need to be paid quickly. With immediate advances from a factor, a business can pay its suppliers or meet payroll without having to wait for your customers to pay the business.

5) Why should I consider factoring vs. a bank loan?

Factoring facilities are much easier to establish and provide our clients needed working capital much more quickly than a conventional bank loan. There is much less paper work and ongoing reporting in factoring. All decisions are made locally by a smaller staff without the use of large time consuming committees. Our factoring division only provides inventory financing and accounts receivable therefore we are not concerned with problem real estate loans like many of the banks. Finally, most importantly, there is no loan associated with a factoring deal and therefore no future obligation to repay principal and interest.

6) My business's financial statements aren't very positive. Am I still eligible to factor my receivables?

* Yes, our client's financial position is secondary to the financial condition of our client's customers. We are purchasing your receivables; therefore, our main objective is to make sure your customers are healthy and have the ability to pay their invoices. We are not making you any type of loan and requiring you to make timely principal and interest payments.

7) What is your average client profile?

* Our clients typically have annual revenues ranging from $500,000 to $20,000,000 and generally have 10-20 customers. The clients are manufacturers, service providers, distributors, contract employees and consultants. Their customers can be small local businesses or large, national retail chains.

8) What are a few of the benefits of factoring?

* Immediately receive cash without the need to repay principal and interest
* Ability to have a reputable company collect your receivables on your behalf, thereby removing the burden from your staff and resources to increase sales and expand your business.
* Ability to take precise advantage of supplier discounts offered for rapid payment.
* Ability to work with a recognized partner that has access to extensive credit and fraud databases that can assist in establishing new customers and establishing customer credit.
* Access to immediate and timey working capital without layering on dilutive and expensive equity.

9) How does the factor get paid?

* When we buy an invoice from you, we ensure that payment is made on that invoice directly to our lockbox. The invoice will show our company name in the "Remit To:" section. Once we receive payment from your customer, we forward the remaining balance to you, minus a small agreed upon fee.

10) How will our customers know when and how to pay you?

* There are three ways a customer will certainly know to pay us for a particular invoice:
o Notice of Assignment – You will provide a letter to your clients in the transaction explaining that you have entered into a new liquidity facility to foster growth and meet your business demands. That letter will reference our relationship.
o Verification – On select invoices, we may call your customer to confirm that a particular invoice was received and that they are to pay our company.
o Information on the invoice - The “Remit To:" section will show our name Kronos Capital and have our specific lockbox mailing details

11) What additional information is needed to proceed?

* Please call or email us at the number or email below. We will perform a quick phone interview to gather some pertinent information on your business and your customers. This initial interview will be followed up with more detailed informational session on your accounts receivable history and a thorough copy of your company's financials.