FAQ

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General Questions

WHAT IS FACTORING?

Factoring is the purchase of accounts receivable/valid invoices for immediate cash. Factoring gives businesses the ability to grow without diluting equity or incurring debt. The sale of accounts receivables is one of the oldest forms of financing and has been in used for over 4000 years in a variety of forms. Additionally, factoring may be a less costly option in the long term. This sophisticated financial tool increases the velocity of cash flow (effectively increasing working capital) and helps avoid problems that slow paying Customers can create. In the U.S., at least until the mid-1980s, many people thought that this form of financing was exclusive only to the textile and garment industries. DBR has been factoring accounts receivable for a wide variety of industries since 1988.

HOW IS FACTORING FROM DIVERSIFIED BUSINESS RESOURCES, INC. DIFFERENT FROM FINANCING FROM A BANK?

DBR focuses on the credit worthiness of your customers instead of your company’s financial history and cash flow. DBR is able to fund you quickly and with discretion while banks may take weeks or months to approve a loan.

WHAT BUSINESSES DOES DBR FACTOR?

DBR factors a wide range of industries, including trucking, temporary personnel agencies, printing companies, manufacturers, wholesalers, construction and many service industries such as janitorial and armed guard services. DBR can Factor most business that provides a service or sells a product on terms not exceeding 60 days.

WHAT SIZE CLIENTS DOES DBR FACTOR?

DBR Factors companies from $5000 to $500,000 in monthly sales.

WHAT CLIENT LOCATIONS ARE SERVICED?

DBR provides service to clients in California, Arizona, & Nevada.

WHAT ABOUT THE LOCATION OF THE CLIENT’S CUSTOMERS?

DBR purchases credit-worthy invoices from anywhere in the US

Application Process

DO I HAVE TO PAY A FEE TO GET STARTED OR FOR YOU TO PROCESS MY APPLICATION?

No. DBR requires no start-up fees.

HOW LONG DOES IT TAKE TO PROCESS MY APPLICATION?

Normally between two and four working days is required for initial funding of a new client. After the initial funding, subsequent factoring requests can generally be funded in 1 to 2 working days.

DO I HAVE TO BE AN ESTABLISHED BUSINESS, OPERATING A MINIMUM NUMBER OF YEARS, TO BE APPROVED?

No. DBR prides itself on catering to the financing needs of small to medium size businesses that are recently founded. Some companies have tremendous promise and have yet to accrue substantial net worth after start-up costs.

HOW DO YOU CHARGE FOR YOUR SERVICES?

The cost of factoring is largely dependent on your customers’ credit and their payment history. DBR evaluates your customers using D&B and TRW credit services plus your accounts receivable experience with your customers.

Invoicing and Collections

DO I HAVE TO FACTOR ALL OF MY INVOICES?

No, Factor only what is needed when you need cash. You are able to pick and choose which account receivables you want to factor and how often you would like to factor.

ARE ALL RECEIVABLES HELD AS COLLATERAL?

Yes. DBR requires a first position on all accounts receivable during the period you factor.

DOES DBR REQUIRE ADDITIONAL COLLATERAL?

No

WHEN WILL YOU FACTOR MY RECEIVABLES?

DBR will factor your account receivables once services to your client have been completed and an inclusive invoice has been prepared.

HOW DO MY CUSTOMERS KNOW WHERE TO SEND PAYMENTS?

When DBR purchases an invoice, an orange sticker with DBR’s return address is applied on the invoice before being mailed to the customer.

WHEN DO I RECEIVE THE FUNDS FOR MY FACTORED INVOICES?

DBR prides itself on its quick response to meet your financial needs. Once the application process is complete, and you are set up to start factoring your accounts receivables, DBR can typically fund you within 4 hours.

HOW IS MONEY TRANSFERRED TO MY BUSINESS?

DBR can wire funds to your account, send a check through FedEx or any other overnight service, via US mail or you can pick up a check from our office at your convenience. If your bank has a branch near our office we can also deposit the check directly into your account.

HOW WILL I KNOW THE STATUS OF MY FACTORED INVOICES?

DBR provides weekly “REBATE” reports reflecting all payments received. In addition, DBR provides a monthly “STATEMENT” which includes all unpaid invoices along with payment activity for the closing month. Upon request DBR will provide an updated report reflecting Open A/R or payments received for the week to meet your needs.

WHAT SHOULD I DO IF A CUSTOMER MISTAKENLY SENDS THE PAYMENT TO MY COMPANY?

If you receive payment for a factored invoice, you must immediately forward the funds to DBR.

WHAT HAPPENS IF MY CUSTOMER DOESN’T PAY THE INVOICE?

If this should occur, your company would have to reimburse DBR, normally by having it deducted from your next advance per your approval. If an invoice is seriously delinquent and you choose to be more aggressive in your pursuit of payment, DBR can provide additional help at that time.

WHEN CAN I TERMINATE THE FACTORING ARRANGEMENT WITH DBR?

You may terminate the agreement with DBR at anytime as long as all factored invoices have been paid in full.

DO YOU CONTACT MY CUSTOMER AND IF SO WHY?

DBR does contact your customers through a one time letter notifying them that you have obtained our services as a source of capital funding. We will then direct them on how to send payment for the factored invoices.

WHAT WILL MY CUSTOMERS REACTION BE ONCE YOU HAVE CONTACTED THEM?

Your customer will generally understand the need for consistent cash flow. Most of the time, our relationship with your customer is through their accounts payable department.

WHAT OTHER SERVICES DOES DBR PROVIDE?

DBR can pre-screen your current and future customer’s credit at your request. We can approve; refuse and/or set credit limits on your purchase orders.

WILL MY COMPANY BE ABLE TO FACTOR IF WE CURRENTLY HAVE A BANK LOAN?

If the bank you have the loan through holds your accounts receivables as collateral, we can request the bank to subordinate its collateral in favor of DBR. Ultimately, the final decision rest in the bank’s hand. If the bank refuses to subordinate its collateral, DBR may be able to arrange to pay down or buy out the loan through factoring of your account receivables.

WE OWE THE IRS BACK TAXES. CAN I STILL APPLY?

Tax problems vary in complexity and are handled on a case by case basis. If the IRS has a lien on your assets, we can request that they subordinated your account receivables in DBR’s favor. DBR has worked with the IRS on several different occasions, and we will try to work out a system in order to allow you to factor as well as satisfy the IRS’s needs.

CAN WE FACTOR PAST DUE INVOICES?

DBR can fund invoices that are up to 30 days old.

WHAT WILL MY CUSTOMERS THINK ABOUT ME FACTORING?

DBR has found that many of our clients’ own customers use factoring as an accepted form of financing. With factoring accounts receivable, clients are able to take advantage of profitable opportunities requiring additional cash. You will actually be in a much stronger financial position now that you have cash available when you really need it. With factoring, your customers give you the business, knowing in advance that you are capable of completing the work they have requested of you because you have the capital to do so.

HOW WILL DBR TREAT MY CUSTOMERS?

The last thing DBR wants you to do is lose a customer. DBR will not badger your customers for money. Maintaining your customers’ confidence is as important to us as it is to you.