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Wednesday, 20 Sep 2017

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Frequently asked questions about accounts receivable financing

Is accounts receivable funding a new financing option?

Accounts receivable funding is one of the oldest forms of financing. It has been around in one form or another for more than 4,000 years. Until the mid 1980s, most people thought accounts receivable fund­ing was only used in the textile and garment industries. Today, accounts receivable funding is a widely used and viable financing solution for all types of businesses that extend credit terms to their customers.

 How can accounts receivable funding help my business?

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 more.


How is accounts receivable funding from Allstate Capital different than accounts receivable financing from a bank?

When making a funding decision, Allstate Capital will focus on the creditworthiness of your customers while banks will focus on your company’s financial history and cash flow. Best of all, Allstate Capital will make a quick funding decision, while banks may take weeks—even months—to approve a loan.

 

Will my company be eligible for accounts receivable funding if it has a bank loan or line ‘of credit?

If a bank has a lien on your company’s accounts receivable, you should let us know right away. We will ask the bank to subordinate that lien in favor of Allstate Capital. This is a common occurrence, most banks will accommodate the request, but we must know this information in advance.

I have had a past bankruptcy, is accounts receivable funding still an option?

Yes, Allstate Capital will still consider your application even if you have credit problems or a past bankruptcy.

What information will Allstate Capital need from my company to begin the accounts receivable funding process?

Along with the application, be sure to include your company’s most recent accounts receivable and accounts payable aging reports, Articles of Incorporation or DBA filing, a master customer list, copy of your ID (i.e. driving license or passport) and a sample invoice with sample supporting documentation (i.e. Proof of Delivery, Order, Contract etc.). For startups, please also submit a business plan and projected sales forecast, and an owner/officer history and profile.


Which customers would be good candidates for accounts receivable funding?

We look to fund all of our customers. First, we need their names, addresses, phone numbers and the amounts of credit desired. This will save you time when submitting invoices to us. Also, anytime you obtain new customers, fax the same information to us, and we will check them out for you.


How long does it take to receive the first funding?

The initial funding takes between 1-3 business days after we receive your signed contract. If you wish, you can send your invoices to be funded with the signed contract. After the initial funding, your compa­ny can receive funds usually within 24 hours after verification.


Does Allstate Capital purchase outstanding invoices?

Yes. For the first funding only, we can purchase your invoices from your outstanding accounts receivable subject to verification.


Are accounts receivable funding fees tax deductible?

Accounts receivable funding fees are an expense and should be treated as such.

Does Allstate Capital verify invoices with my customers?

Invoice verification is an essential, and accepted, part of funding. Because factors verify invoices with customers, they can tell clients if there is a customer service problem right away. A non-factoring client may not notice the problem until the invoice becomes past due. By that time, it may be too late to save the account. For the process to run smoothly, we suggest that you call your customers or send them a let­ter in advance to let them know that you are now working with Allstate Capital. If you need assistance in writing the notification letter, we will be happy to provide you with a sample letter.

 

What should I do if my customer mistakenly sends the payment to my company?

This might happen, especially with the first invoice. If this occurs, the check must be sent to Allstate Capital immediately. Your company should never deposit invoice checks since Allstate Capital may also be providing you with A/R management services.  We also ask that you notify your customer to pay us directly in the future.


How can I be certain that Allstate Capital will treat my customers well?

The last thing we want is for you to lose a customer. Allstate Capital is not a collection agency. We will never harass your customers for money. Maintaining your customers’ goodwill and confidence are of utmost importance to us.

Want to know more?

We understand why you will want a financially stable funding partner, therefore, we are glad to discuss with you how the process works.  Call Allstate Capital and we will give you the information you need to make the best decisions.  Try and get that information from our competitors!


 

Disclaimer
All programs, conditions, and terms are subject to credit approval and can change at any time without notice.
Allstate Capital is not affiliated with The Allstate Corporation or any of its affiliates or subsidiaries, including the Allstate Insurance Company.
Allstate Capital does not offer tax advice.