RE:why go to inspira ..when banks zippo?
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Factoring (also known as accounts receivable financing) is one of the oldest methods of in-house financing. Factoring, simply put, is when a business sells its
accounts receivable to a financial institution or "factor". The factor will advance funds on a portion of the receivables, usually 75-80% of their face value. The remaining 20-25% is known as the "reserve" and is initially held by the factor. The amount of the reserve will vary with the quality of the receivables and the historical average of the payers. Historical late payers will increase the amount of the required reserve.
The factor handles the transactions, administers the accounts, conducts credit assessments and handles collections. For these services and the funds advance, the factoring costs to the borrower may exceed 20% of the face value of the receivables.
Once the accounts are paid, the borrower receives the difference between the face value and the reserve. The factor usually gets a 2-3% fee for the first 30 days, with late charges ranging from 0.067-0.125% per day thereafter.