Accounts Receivable Financing vs. Factoring.

A/R Financing

• Invoices are not purchased but are instead assigned and used to colateralise a Line of Credit
• Advances given against invoices up to permitted “approved” limit; i.e. Line of Credit
• Advances can be as high as 92% of invoice value
• Priced as a Fee plus interest (e.g. Prime + 3) on advanced amount
• Requires strong financials statements for borrower
• Full Notification* not always required; use of Lock Box often acceptable
• Formal Verification not always required
• Dislike of limited portfolio of customers (too much exposure)
• More flexibility regarding
• Minimum face value of invoices
• Minimum aggregate value of invoices factored per month
• Duration of Contract

Factoring

• Invoices are purchased at a discount
• Advances given against invoices without limit to amount for client’s “approved” customers
• Advances generally 80% – 85% of invoice value
• Priced as a discount fee on invoice amount
• Requires strong financials/creditworthiness of client’s customers – minimal requirements for the client
• Full Notification* required – use of Lock Box seldom acceptable
• Formal Verification always required
• Limited portfolio of customers not a concern, rather calibre of customer is important
• Fairly rigid regarding;
  • Minimum face value of invoices
  • Minimum aggregate value of invoices factored per month
  • Duration of Contract

About rates…

We are not your traditional financial institution! Clarity Capital maintains relationships with over 80 of the top commercial finance institutions and banks in Canada, the US and internationally. This provides Clarity Capital with an extremely diverse selection of the best financing products and solutions in the marketplace today.
We are uniquely positioned to provide YOU, our client, with the best A/R Financing and Factoring products available. Best Products. Best Solutions. Best Rates. But that’s not all: our business model allows us to maintain one of the highest credit approval ratios in the business.
For more information about how Clarity Capital’s A/R Financing and Factoring products and services can suit your needs, please contact us.