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How it Works
Factoring is straightforward. Your company bills its customers in the usual way except that you will be asked to stamp each invoice with a "Notice of Assignment" indicating that the invoice has been assigned to Hawaii Receivables Management (HRM). This means that your customer now owes HRM the face value of the assigned invoice. You will also be asked to fax copies of the invoices to HRM. HRM then advances your business between 75% to 85% of the face amount of the invoices.
HRM holds the invoice for the length of its term and if needed, begins the collection process when it becomes due. Once HRM is paid on the invoice, we will release to your company the reserved amount of the invoice (15% ? 25%) minus the appropriate discount fee.
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Day 1 |
Face amount of your invoice due in 30 days sold to HRM |
$1,000 |
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HRM holds a reserve |
<$200> |
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Day 2 |
HRM advances you 80% (upon verification of invoice) |
$800 |
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Day 30 |
Customer's payment received by HRM |
$1,000 |
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Original reserve amount |
$200 |
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HRM's discount fee (3%) |
<$30> |
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Day 37 |
Rebate to you |
$170 |
HRM's discount fee is based on the quality of your accounts, not on the strength of your company. This fee fluctuates according to the creditworthiness and performance of your receivables. The fee can be as low as 2% of the invoice amount depending on the level of risk involved.
As you can see there are many benefits to Factoring. When compared to the cost of maintaining receivables for 30 days or more, and the administrative expense associated with collections, Factoring is an excellent solution to your cash flow problems.
Want to get started? Fill out our easy Application or contact us for a quick, confidential, no obligation consultation.
more on the Benefits of Factoring
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