Accounts Receivable Factoring Examples

October 11, 2019

A great way to understand factoring is to hear about real life examples, it helps to understand the benefits of having the right factoring partner, realize the struggles growing businesses in many different industries run into, see that choosing the wrong factoring company can stifle growth and learn how factoring works as a financing solution.

At Meritus Capital, we are a factoring company that services many different industries, so here are real-life accounts receivable factoring examples for each of the following industries:

  • Temporary Staffing
  • Oil & Gas
  • Transportation & Logistics
  • Professional Services
  • Distribution
  • Government Contractors
  • Healthcare
Temporary Staffing
36MM - Reaching the limits of their current factoring arrangement.

Our new client, a staffing company specializing in logistics was previously with another less flexible factoring company. Their company experienced recent rapid growth to near 36MM dollars in sales annually. As expected, a business growing at this pace is going to experience growing pains and this business was no exception. Their current factoring company no longer wanted to continue to work through the issues of growing at this pace and our client needed to find a factoring company that would meet their needs.

They needed a partner that would:

  • Provide a very high advance rate above 93%;
  • Save them money on the factoring fees; and
  • Have the expertise in staffing to help them through some of the issues they were experiencing.

Meritus Capital came to the rescue and provided what they needed. We were able to give them:

  • The availability to meet all of their growth needs;
  • A 25% savings on their current factoring rate; and,
  • The partnership and tools to effectively deal with their current growth challenges.

This business is now well-positioned to maximize the opportunities they are being presented with. They can be far more profitable and have the tools and a financial partner in place for continued expansion.

Payroll Funding Needed

Challenge: Our client in Ontario, Canada, had the experience, the relationships, and was ready to build his own company in the staffing industry. He had previously grown a company by 11MM dollars in annual revenue, but now he was ready to be an entrepreneur. The only thing he was missing was a funding partner that had the capacity to give him unlimited capital at a low rate enabling him to compete with established competitors.

Solution: We were able to provide a 2MM dollar funding line for our client at an extremely low pay rate. He will only pay that low rate on what he actually uses in funding whereby we do not force him to borrow more than is needed. The company is growing rapidly and is now positioned to leverage our capital and his experience to equal a fantastic success!

10MM line for our Staffing client

Thank you, thank you, thank you. I have never seen such team work on both sides…. Unbelievable, I am thrilled! I can't thank you guys enough you did an incredible job. It was an incredible two-three weeks.

It is expressions like these that make our team love what we do! Here is how it went.

Problem: This staffing client had a maxed out current bank line that wasn't giving him the availability he needed. They came to us only weeks out from the end of the year and if they didn't find another financing facility he would be largely penalized by his current bank.

Solution: We were able to provide him a 10MM line from term sheet to close in two weeks. This enabled the company to have the capital to continue to grow and have the liquidity to pay for necessary business expenses. He needed more availability at a competitive price and the transaction closed in a very timely manner and that's what we delivered! Both sides are very happy about how everything went and are looking forward to seeing this clients continued growth both organically and through acquisitions.

A New Workable Program for a Family-Owned Staffing Company

Challenge: This family-owned staffing/consulting company were not happy with the service of their current funder. They needed more flexibility and better customer service satisfaction in their funding relationship so they would feel comfortable in taking on new business and growing.

Solution: Providing them with a $2MM Accounts Receivable/Payroll Funding program was just the beginning. Our program had a few significant advantages. We provided them more competitive terms, a higher advance rate, and we negotiated an Intercreditor agreement with another existing lender. We also dramatically simplified their funding process. They tell us that our personal customer service and account management has given them the expediency and flexibility that they wanted and we have been delighted to work with them.

Maxed Out Current Factor

Our client, a temporary staffing company, came to us with a problem that we see again and again:

  • They were experiencing successful yearly growth
  • Their current factor was maxed out and unwilling to listen to their client's requests and needs
  • They did not have the 'means' to grow

Would this client stay stagnant, or could they find a way to successfully take advantage of their 35% year-over-year-growth and continue the progressive growth of their business? Meritus provided our client with a $11MM funding and $20MM max LOC, giving them the following:

  • The 'means' to grow
  • The 'room' for growth, and
  • The 'opportunity' to move forwards rather than backwards
Maxed Credit

Challenge: We were recently approached by an IT Staffing Company that was working with a bank that didn't completely understand their business and growth prospects. Their line of credit was maxed out and the bank could not provide the capital they needed for current contracts, much less for upcoming government contracts that could require a six-fold increase.

Solution: Meritus provided an aggressively priced solution for a $6 Million A/R factoring LOC, not only to meet the current capital needs but to enable the CEO to negotiate larger government contracts for future growth. Meritus provided letters to the contracting officers verifying the capacity for our new client to execute on the contracts with our capital. Our experienced team provided a smooth transition for the government contract funding to balance out their cash flow needs.

Working Capital

Our new funding client came to us as a start-up company. He had tremendous growth potential, but no access to working capital needed for recruitment, sales expenses, and payroll. Meritus provided the working capital and freedom needed to exponentially grow this company from zero to $7.2 million annual run rate within the first year. With an unlimited capital line and excellent customer service, this company continues to use our finance solutions.

Outside The Box Solutions

Our new staffing client signed our agreement immediately before Hurricane Katrina struck. In dealing with the aftermath of Hurricane Katrina, they faced numerous funding and customer service challenges. This company was desperately in need of an expeditious funding solution that included a significant degree of flexibility on our part. With a resourceful and agile team of professionals, Meritus worked through the challenges of doing business during this time. Our team funded the company with an outside the bo


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