In this article, we will list the 10 largest factoring companies in the United States. Click to move forward and go to 5 largest factoring companies in the United States.
Do you have unpaid invoices that you want to turn into cash to finance your business? If you run a business and are hit hard by the COVID-19 recession, you may need to consider invoice factoring. Invoice factoring occurs when a company sells its unpaid invoice with a discount for an initial amount of cash to a third-party factoring company. It’s a smart financing solution for business owners who need cash right away for their inventory and operations. Invoice factoring treats unpaid qualifying invoices as collateral and the money you receive in advance from a factoring company is not considered debt. Factoring transactions are straightforward because your invoices are purchased in two installments: first, the factoring company pays 70-90% of the invoice amount and the second installment will be deposited with your bank minus the finance charge . Factoring rates vary depending on accounts receivable. Yet, in general, factoring companies can invoice daily, weekly, or monthly.
One of the most sustainable alternative ways to grow your business is invoice factoring. Quick and easy access to cash flow will not only help a business pay its utility and rent bills. But it will also help small business owners focus on growing their business by focusing on acquiring new customers and consumers. Additionally, invoice factoring helps business owners pay vendors and avoid inventory constraints. Especially now with the coronavirus pandemic impacting the revenues of small and medium-sized businesses, viewing factoring from a transparent and reliable factor could save lives for a business. So, for a business owner, accounts receivable factoring is a great financing solution to grow their business without having to deal with creditors. To give you an idea, factoring can be used in any industry where goods or services are sold and paid for in 30-60 days. Some of these industries are trucking, freight brokers, hospitals, petroleum services, construction, and logistics.
In 2019, the factoring industry was valued at $ 3,114.42 billion with a projected compound annual growth rate (CAGR) of 7.5% from 2020 to 2027. The global factoring market is expected to reach 9 $ 275.15 billion by 2025. According to the Trade finance association, there was a 10.4% or $ 87.3 billion increase in domestic factoring volume in 2018. Regardless of the size of the company, one of the factors that has led to recent growth of the factoring service sector is the credit crunch with banks. Large companies tend to seek the help of a factor although it is more expensive than a bank loan because factoring companies are more attracted by the strength of the trade receivables than by a healthy financial history. While Europe conquered the global factoring market by obtaining 65.5% in 2017, the Asia-Pacific region is regularly catching up with the development of activity, which is accelerating mainly led by China. Additionally, small and medium-sized businesses need alternative financing that won’t break the bank. Nevertheless, the factoring market is a very competitive industry with a large number of global and local players such as Triumph Business (NASDAQ: TBK), HSBC Holdings plc (NYSE: HSBA), Eurobank (OTCMKTS: EGFEY) and Mizuho Financial Group (NYSE: MFG). For future reference, read our topic on 16 largest financial services companies in the world.
In June 2020, the World of Open Account (WOA) studied the impact of COVID-19 on factoring and trade finance companies. He said 2/3 of businesses felt either high or badly affected by the economic downturn from COVID-19. In addition, the recession affected business volume by around 50%. The survey also indicated that factoring and financial companies estimate the impact of COVID-19 to be significantly greater than that of the 2008/09 financial crisis. In total, 60% of WOA respondents estimated that it will take a year or two to bounce back.
Finding the best factoring company to help you with your business can seem a little overwhelming. So we’ve created a list of the biggest factoring companies that offer the lowest minimum rates with the maximum trade receivables allowed. While the factors determining the best factoring companies differ from the size of the companies they work with, the industries they specialize in, and the speed with which they deliver money, we decided to focus on the turnover and the number of employees of a company. We’ve collected data from RocketReach and sorted the top factoring companies here in our list. We have also included the discount rates and maximum trade receivables offered by a factoring company which are directly available on the websites of the factoring companies. We’ve done the research, so you want to do it! Here are the largest factoring companies in the United States to date:
Copyright: sifotography / 123RF Stock Photo
Turnover: $ 5 million Number of employees: 31 Market capitalization: 4.957 million Minimum rate percentage: 0.75% to 3.5% Maximum debit account: $ 4 million
altLINE has been in the factoring industry for over 80 years. It is the alternative lending arm of the Southern Bank Company. altLINE offers competitive rates and can take advantage of not having to pay additional borrowing fees to third-party providers. Common industries for altLINE include distribution, consulting, food and beverage, textiles and clothing, wholesale, oil and gas, staffing and manufacturing. Besides factoring, altLINE also offers some of the best financial solutions for your business, such as accounts receivable financing and asset loans. A business owner can easily get a quote from the altLINE website and can be completed in minutes.
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9. Paragon Financial Solutions
Revenues: $ 27.60 M Number of employees: 35 Minimum rate percentage: 1% Maximum accounts receivable: $ 10,000
A great option for startups and businesses with tax issues is Paragon Financial Solutions (PGNN US: OTC). This factoring company, founded in 2014 in Memphis, Tennessee, is much smaller than the other factoring companies on our list with only 2,200 previous client companies, but they have funded more than $ 2 billion in fundings. Paragon Financial Solutions is a partner of Paragon Bank, where the company offers non-recourse factoring that allows businesses to get advance sales for their invoice between $ 30,000 and $ 10 million. Non-recourse factoring means you don’t need to redeem the invoice even if a customer doesn’t pay Paragon Financial. Their factoring rates range from 1% to 2% depending on the industry you are in and are billed every 30 days.
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8. Triumph Business Capital (NASDAQ: TBK)
Turnover: $ 34.9 million Number of employees: 166 Minimum rate percentage: 1% to 4% Maximum debit account: $ 5 million Triumph Business Capital is a member of Bancorp and their rate starts at 1% and may go up to 4%. Founded in 2004, Triumph Business Capital was previously known as Advance Business Capital. Triumph Bancorp, on the other hand, is a reliable financial holding company with diversified financing services such as trade finance and asset management activities. The Dallas-based company is renowned for factoring industries such as trucking, staffing, oil and gas, government contractors, and freight brokers. They are also appreciated for their invoice management; an easy-to-access web portal and support from the Triumph Business Capital team.
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7. Financing of break-up capital
Revenue: $ 39.20M Number of employees: 47 Minimum rate percentage: 1.25% Maximum debit account: $ 500,000
Breakout Capital is one of the factoring companies providing short term business finance solutions to small business owners with transparent and flexible factoring options. The company is founded in 2015 and headquartered in McLean, Va., Is a financial technology company serving small businesses. Breakout Capital offers FactorAdvantage in which you can receive a cash advance of up to $ 500,000 in addition to accounts receivable. The repayment term can be up to 24 months and there is only a one-time 2.5% setup fee. They might offer a higher rate than other factoring companies, but they don’t need any business or personal credit scores or monthly income for you to be eligible for financial service.
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6. Charter Capital Holdings
Revenue: $ 45.60M Number of employees: 50 Minimum rate percentage: 1.20% Maximum accounts receivable: $ 10 million Low and higher rate accounts receivable compensation? Charter Capital is the factoring company for you. The company offers same-day financing with open-ended contracts. There is no limit on accounts receivable, but $ 10 million is a comfortable number for the factoring company. Charter Capital is popular for its 24/7, professional and timely customer support. Factoring fees vary from 1.20% to 5% depending on the industry of your business. They also have a user-friendly online application where once you qualify for the screening, a factoring professional will contact you by phone or email within 24 hours. The only downside is that Charter Capital is a resort factoring company. In other words, if your customer doesn’t reimburse you, you have to buy back your invoice, which could hurt your income, not to mention the factoring fees. Click to continue reading and view the 5 largest factoring companies in the United States. Suggested articles:
Disclosure: none. 10 largest factoring companies in the United States was originally published on Insider Monkey.