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Cash Flow Financing
Quest Financial Services focuses on helping companies with cash flow needs such as accounts receivable
financing, factoring, purchase order lending, working capital, inventory lending, and equipment leasing. Referrals
are welcomed. Contact Quest at 626.792.7363 or at quest@greenheart.com. Your company may be experiencing
a problem that is actually an opportunity for growth.
All financing types have costs including cash flow financing. However, there is some flexibility in cash flow
financing that is not available in other types of financing. Also, there is flexibility with non bank funding resources.
In broad brush terms these resources pay between 85 and 97 percent of the amount of the invoices. They
usually, but not always, retain a 10 to 15 percent cash reserve to cover losses caused by non performing
accounts. The reserve is transmitted to your company once the related invoices have been paid.
There are some things that you can do to move toward the higher percentage level. Your action will come from
the issues affecting the pricing.
First, the financial strength of your client makes a difference. Making more sales to stronger companies will tip the
balance in your favor.
Second, the type of industry you and your customer are in. Some industries have a habit of prompt payment;
some industries have a habit of delayed payment. The prompt payers will help your company decrease its
factoring cost. Also, some industries are declining which lowers their credit perception; some industries are
ascending which increases their credit favorability.
Third, your company’s financial strength affects the cash flow financing cost. This is especially significant when
your factoring contract includes a recourse relationship.
Fourth, the credit policies you have established with your customers make a difference when collection becomes
an issue. These policies help determine the credit quality level you require of your customers before you extend
credit.
Fifth, your policies and the quality of your products affect your level of returns. Returns are a cost of doing
business. Your cost of cash flow financing decreases in relation decreasing levels of product returns.
Copyright issued July/August 2006 by Quest Financial Services.
Allen H. Clason
Quest Financial Services
235 E. Colorado Blvd., # 353
Pasadena, CA 91101
(626)792-7363
quest@greenheart.com
greenheart.com/quest
financing, factoring, purchase order lending, working capital, inventory lending, and equipment leasing. Referrals
are welcomed. Contact Quest at 626.792.7363 or at quest@greenheart.com. Your company may be experiencing
a problem that is actually an opportunity for growth.
All financing types have costs including cash flow financing. However, there is some flexibility in cash flow
financing that is not available in other types of financing. Also, there is flexibility with non bank funding resources.
In broad brush terms these resources pay between 85 and 97 percent of the amount of the invoices. They
usually, but not always, retain a 10 to 15 percent cash reserve to cover losses caused by non performing
accounts. The reserve is transmitted to your company once the related invoices have been paid.
There are some things that you can do to move toward the higher percentage level. Your action will come from
the issues affecting the pricing.
First, the financial strength of your client makes a difference. Making more sales to stronger companies will tip the
balance in your favor.
Second, the type of industry you and your customer are in. Some industries have a habit of prompt payment;
some industries have a habit of delayed payment. The prompt payers will help your company decrease its
factoring cost. Also, some industries are declining which lowers their credit perception; some industries are
ascending which increases their credit favorability.
Third, your company’s financial strength affects the cash flow financing cost. This is especially significant when
your factoring contract includes a recourse relationship.
Fourth, the credit policies you have established with your customers make a difference when collection becomes
an issue. These policies help determine the credit quality level you require of your customers before you extend
credit.
Fifth, your policies and the quality of your products affect your level of returns. Returns are a cost of doing
business. Your cost of cash flow financing decreases in relation decreasing levels of product returns.
Copyright issued July/August 2006 by Quest Financial Services.
Allen H. Clason
Quest Financial Services
235 E. Colorado Blvd., # 353
Pasadena, CA 91101
(626)792-7363
quest@greenheart.com
greenheart.com/quest
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