Frequently Asked Questions
If you are new to factoring or to CapitalPlus Equity we hope that these FAQs will give you the information you need to make the right decision for your company’s cash flow needs.
Q: What is factoring?
A: Factoring is selling the right to payment in receivables or invoices to a factor such as CapitalPlus Equity, LLC at a small discounted rate from face value so that you do not have to wait the normal 30-45 days for payment. Factoring is also referred to as receivables financing. Over a billion dollars are provided to businesses each year through factoring and it is a financial service used by a range of companies from multi-million dollar corporations to small privately held companies.
Q: How can accounts receivable Factoring with CapitalPlus Equity help my business?
A: By providing an immediate source of cash flow for your company. You can use this cash to provide working capital, meet payroll, pay taxes, replenish inventory, increase advertising, purchase equipment, improve your credit rating, and so much more.
Q: How can CapitalPlus Equity give me cash for my unpaid invoices?
A: You provide CapitalPlus Equity with the original invoice and purchase order or contract, and we fund you 80% or more of the amount that would have been paid to you by your customer. Then CapitalPlus Equity collects the total amount due on these invoices from your customers and refunds the balance to you less our fee.
Q: How much does CapitalPlus Equity charge for these services?
A: The fee is based on monthly dollar volume, number of invoices, the length of time it takes invoices to pay, and the credit of your customers. Additionally, our fee is absolutely all-inclusive!
Q: Do I have to pay a fee to get started or for you to process my application?
A: No. CapitalPlus Equity has no application fees.
Q: How long does it take to process my application?
A: We will generally be able to process your application, complete the required paperwork, and fund your first invoices within three business days of receiving your complete application and required accompanying documents. Some new clients take a little longer, and some a little less time. We will usually be able to provide you with preliminary approval within 24-48 hours.
Q: What is the difference between “recourse” and “non-recourse” factored invoices?
A: Invoices factored on a “recourse” basis means that the client is ultimately responsible for payment whether or not the customer pays. Factoring invoices on a “non-recourse” basis means that the factoring company assumes the credit risk of the customer (usually at higher rates), thereby protecting the client from possible credit loss. CapitalPlus Equity purchases almost all invoices on a recourse basis, but we will work with clients on a non-recourse basis under specific conditions.
Q: Do I have to be established in business for a minimum number of years to be approved as a CapitalPlus Equity client?
A: No. CapitalPlus Equity specializes in helping growing businesses and also new, start-up companies with accounts receivables.
Q: Are my receivables held as collateral?
A: Yes. CapitalPlus Equity purchases your invoices through the factoring process and, therefore, we become the first position lien holder on all of your invoices while you are a client.
Q: How long do I have to commit to factoring my invoices?
A: CapitalPlus Equity does not require any long-term contracts. We let you determine what is best for your company and which invoices you will factor and for how long you factor them.
Q: What is an asset-based lender (ABL)?
A: ABLs are financing companies that offer loans based mostly on the asset section of a balance sheet such as equipment, inventory and accounts receivables. If a business defaults on its loan, the ABL can seize the collateral and sell it to recover its losses.
Q: My company owes back taxes. Can I still apply for accounts receivable funding?
A: CapitalPlus Equity handles tax problems on a case-by-case basis. Please let us know immediately so that we can discuss the payoff of your back taxes or to obtain a subordination with the IRS.
Q: I have had a past bankruptcy. Is accounts receivable funding still an option?
A: Yes. CapitalPlus Equity will still consider your application even if you have had credit problems or a past bankruptcy.
Q: How do you establish your fees?
A: CapitalPlus Equity’s fee structure is based on a combination of criteria including: Anticipated monthly factoring volume; customer creditworthiness; number of factored customers; number of invoices sent to customers; average invoice amount and average account payment terms.
Q: Does CapitalPlus Equity offer purchase order financing or financing for work in progress?
A: No. CapitalPlus Equity only provides cash flow funding of invoices for goods and services that have been satisfactorily delivered and/or performed and billed in arrears. We may, however, be able to refer you to a financing company that can provide purchase order funding or other needed services.
Q: Are accounts receivable factoring fees tax deductible?
A: Most CPA’s agree that accounts receivable funding fees are a business expense and should be treated as such.
Q: Do you only work with contractors in a particular area?
A: We work with contractors nationwide including New York, Chicago, Dallas, Houston, Atlanta, Tampa, Jacksonville, Charlotte and Nashville.
Q: Where does the other 20% of the invoice go?
A: When we receive payment from your customer the 20% becomes real money and is given back to you on a regular basis as each invoice pays, minus our fee. (Percentages may vary with individual companies.)
Q: How often do I give my invoices to CapitalPlus Equity?
A: You may supply CapitalPlus Equity with a schedule of invoices daily, weekly, monthly or as often as you choose without penalty or added fees.
Q: Does CapitalPlus Equity prepare my invoices?
A: No. Clients are required to prepare their own invoices using the U.S. Postal Service approved addressing format.
Q: Will CapitalPlus Equity purchase only a portion of my company’s invoices?
A: CapitalPlus Equity allows you to decide which invoices to factor and which to keep in-house. But, remember that when invoice volumes are higher and larger numbers of invoices are issued to a larger pool of customers, the result is lower factoring fees.
Q: Will CapitalPlus Equity purchase my outstanding invoices?
A: Generally, yes. We will purchase your current outstanding receivables (under 60 days old) as part of the initial funding so long as the accounts can be verified and the customer is credit-worthy.
Q: Will you provide my customer a replacement invoice?
A: Yes, we will fax or email a replacement invoice on request.
Q: Does CapitalPlus Equity verify invoices with my customers?
A: Invoice verification is an essential, and accepted, part of factoring. CapitalPlus Equity generally verifies invoices and completion of work by phone, email or fax to ensure their validity and that there are no offsets or issues that may reduce the expected payment.
Q: What is the cut-off time for submitting my invoices?
A: Invoices must be submitted by 12:00 p.m. ET for same-day funding. Invoices submitted after 12:00 p.m. ET may not be funded until the next business day. Invoices may be submitted by fax, email, FedEx, UPS, courier or dropped off at our offices during normal business hours.
Q: Is there an invoice dollar limit on customer invoices?
A: CapitalPlus Equity has no dollar limit on individual invoices. However, we do have a $6,500.00 minimum schedule amount for fundings. Before submitted invoices are purchased, CapitalPlus Equity will verify the customer’s payment history and unpaid invoices against the customer’s approved account limit. You will be promptly notified of any customer issues.
Relating to Your Customer
Q: What should I do if my customer mistakenly sends a payment to my company?
A: Checks received by you for funded accounts must be submitted to CapitalPlus Equity immediately. Your company should never deposit checks that are from customers who are being funded by CapitalPlus Equity. Before CapitalPlus Equity will fund a customer, that customer will be notified that payments must be remitted directly to CapitalPlus Equity. Your customer’s obligation to pay CapitalPlus Equity for the invoices funded will not be released until CapitalPlus Equity has received their payment. Payments deposited by you for funded invoices will not release their obligation.
Q: What happens if my customer doesn’t pay the invoice?
A: Your contract with CapitalPlus Equity is a recourse agreement, which means that your company will ultimately absorb the credit risk either by replacing the invoice with another collectable invoice or having the amount due for the invoice deducted from the next advance or your reserve. (Other competitor factors may use non-recourse agreements, whereby the factor will usually charge a larger fee and sometimes require an account deposit.)
Q: How can I be certain that CapitalPlus Equity will treat my customers well?
A: CapitalPlus Equity’s success is directly related to your success. The last thing we want is for you to lose a valuable customer. CapitalPlus Equity is not a collection agency. We will make routine courtesy collection calls but will not harass your customers for money. Maintaining your customers’ goodwill and confidence are extremely important to everyone at CapitalPlus Equity.
Q: Where do my customers send invoice payments?
A: When you present us with a new customer, we will notify your customer of the new remit address of CapitalPlus Equity, LLC, P.O. Box 24118, Knoxville, TN 37933. They may send payments by FedEx, UPS or courier to 2510 Solway Road, Knoxville, TN 37931.
Q: What happens if a customer mails an invoice payment to my business?
A: Please do not endorse or deposit any misdirected payments but please send these payments to CapitalPlus Equity either by personal delivery to us or mail, FedEx, UPS or courier. Payments not received by CapitalPlus Equity will remain outstanding and will not be applied to your account.
Q: How is my customers credit limits determined?
A: Customer credit limits are based on one or more of the following: How long it takes them to pay, number of years they have been in business, net worth of their company, number of employees, credit appraisal rating, trade references and/or our client’s history with CapitalPlus Equity.
Q: Will CapitalPlus Equity provide me with a credit rating for my customers?
A: Yes. Although CapitalPlus Equity does not provide credit information on all customers as a part of our client services, we will provide credit ratings for specific customers when requested for the purpose of determining credit-worthiness of a potential new customer.
Q: How soon can I get financing?
A: After the schedule of invoices is processed, funding will be made by check, wire or ACH transfer. Funding normally occurs the same day before 4:00 p.m.
Q: When will I receive my money?
A: Payments by wire will be in your bank account by 4:30 p.m. the same day your invoices are purchased, ACH will be in your account the next business day. If you prefer to pick up your check, we will phone you when your check is ready. We can also mail your check if that is your preference.
Q: What types of accounting reports will I receive?
A: We provide daily cash reports on invoice payments received and also a schedule of account reports, reserve reports, monthly account reports and account aging reports.
Q: Will I be charged extra for collection services?
A: No. Our collection services are included in your factoring fee.
Q: How will I know the status of my factored invoices?
A: CapitalPlus Equity works closely with our clients notifying them when payments are received and sending monthly statements.
Q: What do your collection services consist of?
A: When your customer invoices exceed the net payment terms you set up, we will perform soft collections to customers consisting of nonharassing, courtesy telephone calls to only accounts payable for related invoices. We also prepare and send monthly past due statements to customers. If a customer requests a replacement invoice, we will provide that by fax or email to them. CapitalPlus Equity is not a collection agency and we do not deal with collection agencies.