Invoice Factoring Benefits: Falcon Staffing, Inc.
Accounts Receivable Management provides accounting, collection and processing functions, while offering an 80% advance for invoices generated.

Falcon Staffing (Falcon) was started as an outsource industrial staffing company serving the shipping industry as a niche market. They primarily catered to other small companies that had secured contracts with larger corporations providing multiple opportunities. Falcon had approximately 20 people in the field at any one time and their reputation as a quality oriented company that did what they promised, continued to offer more lucrative opportunities. Ted, the owner, always had to hedge his finances as to available cash flow reserves and how many people he had in the field that were to be paid on a weekly basis. With revenues of approximately $750,000 and a profit margin of 25%, Ted had a precarious situation with his cash flow reserves and working capital in meeting day to day business obligations.

Falcon’s customers were very aggressive with providing new business for Ted, however, payments for work completed were generally not sent for 40-45 days after Falcon submitted their invoices. This created a situation where Ted could not accept additional work due to this level of accounts receivables, and this ultimately slowed his business growth. Ted’s local bank, while appreciative of Ted’s business, could not provide financing with a sufficient line of credit for his operations as he did not have any real asset’s to pledge as collateral.

Ted decided he must find another source of financing to assist with his accounts receivables issues, and considered an “angel” investor that could infuse the needed cash flow into the business. Much to Ted’s dismay, this investor also wanted an equity position in the company that Ted had worked so hard to build. In Ted’s view, this was only a last resort. Through further investigation Ted discovered Accounts Receivable Financing (Factoring) as an alternative source of funding, which unlike a bank was based on his productivity, not his balance sheet.

Ted retained Capital Funding Solutions (CFS) to manage the Accounts Receivables; provide accounting, collection and processing functions, while offering an 80% advance for invoices generated. The cash was available on the day his employee’s completed their work and an invoice was created. Through CFS’ funding programs that put no restrictions on how or when Ted financed his accounts receivables, he was able to effectively manage the cash flow.  He even hired an employee leasing firm that provided payroll functions and directed CFS to make wire transfers each week to the employee leasing company in order to cover payroll. Ted was able to outsource vital administrative finance functions of his company at a fraction of the cost of hiring employee’s internally to manage these activities, while he focused on business operations and other revenue generating activities.

Ultimately, through the implementation of CFS’ AR management and financing services, Falcon’s financial position, cash flow, and working capital was greatly strengthened allowing Ted to seize new opportunities and grow the company. Over the course of the next two years, Falcon developed direct relationships with the larger companies he was not able to work for previously. At that time, Ted had several hundred employees in the field and grew his revenue to nearly $8,000,000 and large profits. Fortunately, the accounts receivable funding facility grew with him and the needed cash flow and working capital was always there to sustain his growth. After 3 years, Falcon’s reputation and prowess in his industry had grown to a point where he was able to negotiate better terms as to when he was paid for outstanding invoices. Utilizing these quicker payments of accounts receivable from his client’s, he was able to reduce the need for invoice factoring, still maintained full ownership of his company and has his sights on continued growth. Of course, should he continue to grow the revenues of the company, he always can rely on Factoring to take on any financial challenge he may face in the future.

Factoring Accounts Receivables in Non-traditional industries: Midwest Publishing, Inc. With financial resources and full accounts receivable management provided by CFS, Midwest has achieved sales volume gains well over 100%, while not having to add administrative staff or effort to maintain receivables management and accounting functions.

Midwest Publishing is a company established to appeal typically to “mom & pop” retail and wholesale operations that would like a cost effective means of advertising their services to local clientele. While other forms of advertising (i.e. Newspaper, radio, TV) are generally too expensive for these types of businesses, Midwest Publishing was able to work with local printers to produce a business oriented newspaper in Midwest towns that typically do not have local business publications, other than the local or regional newspapers.

Midwest Publishing had been in business for approximately 2 years prior to working with CFS and had developed a loyal following of client’s that benefited from their relationship with Midwest. However, as Midwest’s business continued to grow, they found they had two major obstacles to continued growth: managing their accounts receivables effectively while constantly searching for new business and offering the terms necessary to new client’s while maintaining their ever-growing business obligations (printer’s, paper supplier’s, etc.).

Utilizing CFS’ financing and administrative support solutions is very important to the continued success of Midwest Publishing. At the setup phase of a new client, Midwest submits a client credit request to CFS for a detailed report on the creditworthiness of the prospective client. CFS provides these comprehensive reports at no charge to their client’s and continues to monitor them on a regular basis, helping to ensure the continued creditworthiness of each of the debtor’s. With the financial resources and full accounts receivable management of CFS, Midwest has achieved sales volume gains well over 100% and has continued to gain new client’s, while not having to add administrative staff or effort to maintain receivables management and accounting functions.

In CFS, Midwest Publishing has a partner that is always there to provide the financial support, no matter what direction they take their business. As most factoring companies do not like to get involved with the “advertising” industry, CFS will always look for a way to make a deal work for the client. With eyes on larger local businesses, Midwest can negotiate with confidence and have the flexibility to offer the necessary elements to close the deal, without fear of the obligations that are created with higher dollar volumes and corresponding payment to their supplier’s.

Working with a Factor that does it right: PeopleRock, Inc.  After invoice factoring and accounts receivables management provided by CFS, PeopleRock became very profitable and was acquired by a larger company and the owners reaped the financial rewards of the buyout.

PeopleRock is a direct recruiter and IT staffing firm located in the Southeast. Through a personal friend of the owner of PeopleRock, Capital Funding Solutions (CFS) was introduced and as is typical, we began the process of understanding what were the real needs of the client; how we could be most effective in our administrative and financial support. CFS quickly learned that PeopleRock was working with an existing Factor and they were struggling with the fees being incurred and the length of time it was taking to collect on outstanding accounts receivables.

PeopleRock primarily catered to larger corporations in the Southeast and had developed a promising reputation. However, with the financial challenges of cash flow for any staffing company and the lackluster performance of their previous invoice factoring partner, they were not able to grow and increase profitability.

CFS evaluated the outstanding receivables and projected growth of PeopleRock and developed a plan of attack. After a buyout of the previous factor, CFS took over and were quickly able to notify each of the client’s of PeopleRock as to the new invoice factoring relationship, while developing a system that allowed the client to continue focusing on cash flow generating activities.  CFS to provide a high level of receivables management administrative support and financing that was flexibly designed to allow PeopleRock just in time funding to take care of their various business obligations.

Within 3 months of initiation of the invoice factoring relationship, CFS was able to reduce the DSO (Day’s Sales Outstanding) of PeopleRock from an average of 62 days, to 38 days, a decrease of nearly 40%. With the immense savings in fees incurred and with an established regular pattern of payments of invoices from their client’s, PeopleRock became very profitable. After 8 months of invoice factoring and accounts receivables management provided by CFS, PeopleRock was acquired by a larger company in the same business and the owners reaped the rewards of the buyout.

Although, CFS always enters a factoring relationship with a long term view to develop cost effective and value added programs that allow our client’s to prosper and CFS with them, PeopleRock’s financial case study is one where our performance was such that a situation was created that even the client did not expect and we were glad to be a part of their success. We built a factoring relationship that will lead to eager referrals from our client and should the situation arise again, a client that will look no further than CFS to provide the financial and administrative tools to seize new funding opportunities and take their business to the next level.

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