Commercial Finance FAQ | eCapital

Frequently Asked Questions

General

What is factoring?

Factoring allows your business to release cash against your outstanding customer invoices before they’ve been paid. The difference between factoring and invoice discounting is that we manage your credit control. Factoring is a good funding solution for new, growing and established businesses that are unable to obtain traditional bank financing as well as businesses that experience seasonal demand. With eCapital, you’ll have a dedicated accounts team that works with you and your customers.

How long does it take to set up factoring with you?

Getting to know your business is a priority. We want to make sure we offer you the best options possible that match the growing needs of your business. We’ll want to talk to you within 24 hours of you contacting us and we’ll need to see a certain amount of paperwork before we make a decision. If we have the paperwork we need from you, we can make a decision in a couple of days of you getting in touch. That’s why our clients like working with us. We don’t hang around.

Who benefits from factoring?

We have many clients across multiple sectors benefiting from our service. Factoring benefits clients who have customers on long payment terms, or who pay late. We spend the time liaising with your customers over their payments, so you don’t have to, freeing up your time to manage your business and focus on growth. We help improve your cash flow. You also have real-time, online access to status reports via our account management system.

Why should I use eCapital?

We are a forward-thinking, privately held business that has experience working with many industries around the world. We work with firms in manufacturing, wholesale and distribution, B2B services, staffing, engineering, recycling and waste management, transportation, warehousing and more.

We will advance funds against:

How much will factoring cost me?

Costs are dependent on the services you use and the amount of invoices we handle for you. Contact us today for a free, no-obligation quote.

What are Asset Based Loans?

Our Asset Based Lending solution is a secure loan based on the value of the assets within your business. We’ll lend against accounts receivable, machinery and equipment, inventory and real estate.

Asset Based Lending solutions can help you:

Your business might be experiencing fast growth or need more operating capital, whatever you need, ABL loans allow you to tap into your assets to generate the cash you need now. Call us to find out how we can help your business grow.

Who benefits from Asset Based Funding?

We have many clients across a diverse range of sectors benefiting from our Asset Based Funding solution. Asset Based Lending gives you the opportunity to leverage funding from your accounts receivable, machinery and equipment, inventory and real estate to gain the working capital you need.

What can I expect from eCapital?

We are committed to helping you grow your business. Our people really do go the extra mile to provide you with a funding solution that is right for your business needs. They work hard to get to know your business and your financial requirements. Our contract terms are flexible and tailored to your needs. We work quickly too, so that you can generate the cash you need, when you need it.

How long does it take to set up an Asset Based Lending facility with you?

The time it takes to set up a facility with eCapital varies and is dependent on the complexity of your business. But generally, we can be up and running in a few days.

Here’s how it works – after our initial consultation with you where we get to grips with your business and its financial needs, we review your financial information and then send you a detailed funding proposal based on your needs.

After you sign your acceptance of the funding proposal, due diligence commences, and you receive the legal documents outlining the agreed terms and conditions. After this you receive the agreed funding.

We need credit quickly; how do Asset Based Loans compare to a credit line or loan from a bank?

Asset Based Loans are usually easier than qualifying for a bank loan or credit line as the facility is backed by your business’s receivables and assets. You just need to show a track record of profitability and strong financial controls.

You’ll find that ABL financing has fewer restrictions than loans and credit lines, which means less worrying about staying in compliance, so you can focus on running and developing the business.

The cost of funds is also typically lower with ABL compared to a traditional loan or line of credit from your bank.

What kind of firms do you offer Asset Based Loans to?

We work with firms with annual revenues of $20 million – $150 million looking for funding lines of between $1 million – $10 million.

We work with firms in manufacturing, wholesale and distribution, B2B services, staffing, engineering, recycling and waste management, transportation and warehousing.

How do I arrange Asset Based Funding through you?

Call us to have a no-obligation confidential chat with our team. They can arrange an appointment, either over the phone or at your premises, with one of our specialists.

After our initial consultation to understand your business and its financial needs, we review your financial information and then send you a detailed funding proposal based on your needs.

After you read our offer and sign your acceptance of the funding proposal, it’s at this point due diligence commences and you receive the legal documents outlining the agreed terms and conditions. After this, you receive the agreed funding.

What does NOLV mean and how is it calculated?

NOLV stands for Net Orderly Liquidation Value and it is the estimated value a business would receive if its assets were liquidated in an organized manner over a period of 6 – 9 months, after sales expenses are taken into account.

You should start with the value of the assets stated in your accounts.

You should then rework the NOLV figure for your main assets as you will need to consider economic realities such as:

What does FMV mean and how is it calculated?

FMV stands for Fair Market Value and it is the reasonable selling price of assets on the market.

What are the fees?

Asset Based Lending can be more cost-effective than a loan or a credit line; however, the interest rate is often not the only fee. To avoid surprises, ask the lender for a complete breakdown of the types of services and fees associated with your facility and how often they get revised. Typical fees include maintenance fee, audit fees and up-front closing fees.

What other benefits do I get with ABL loans from eCapital?

There are many benefits to working with eCapital. You get:

Who is eCapital?

eCapital Commercial Finance is a forward-looking, privately held business, with over 25 years of providing personal, responsive and flexible customer-centric solutions.

As well as Asset Based Lending solutions, we specialize in Invoice Factoring across many industry sectors.

Why should I work with eCapital?

We have experience working with business owners in various industries. We work fast to understand your business, so we can agree on options that work for both of us. We take the hassle of chasing payments away from you, so you can concentrate on growing your business. You don’t even need to provide security. Your invoices are our assets.

Transportation

What is freight factoring?

Freight factoring is a specialized form of invoice factoring designed for the transportation industry. It is a mainstream financial strategy that involves the selling of account receivable invoices at a discounted rate in exchange for immediate cash. Learn more about freight factoring.

How does freight factoring work

It’s simple! First, sign up. Setup is fast and easy and you’ll get approved right away. Then, deliver a load. Upon delivery you submit any paperwork to show the work was completed (invoice, rate confirmation and signed bill of lading) via web upload to our client portal or through the mobile app. Then you receive up to 98% of your invoice immediately. The funds are transferred directly into your eCapital account.

What happens if my customers are unable to pay?

If your customer does not pay due to unforeseen complications then you become responsible for the full repayment of the invoice amount. Alternatively, we will ask you to exchange the invoice for another of comparable value.

Who will contact my customer to collect payment?

Our customer care team have specialized training to collect payment and protect your relationship with customers.

Do I qualify for freight factoring?

Companies experiencing high growth, financial difficulty or are starting up qualify for freight factoring. Other examples of companies who qualify include:

Where can I learn more about freight factoring?

We provide several resources to learn more about freight factoring:

How do I request funding and monitor my account?

We make it easy for you to request funding or check the status of your factoring account by providing a combination of personalized service and online access.

Do I use recourse or non-recourse factoring?

Choosing recourse and non-recourse factoring depends on the relationship a trucking company has with its customers.

Recourse factoring places the responsibility on trucking companies to buy back invoices or exchange them for another of comparable value if the customer does not pay for the delivered load within 90 days. The benefit of this type of factoring is that it has lower fees associated with it.

Non-recourse factoring places the responsibility on the factoring company to absorb the financial loss if a trucking company’s customer does not pay for a delivered load; however, this only happens if the customer cannot pay due to bankruptcy. This circumstance is rare given a customer’s inability to pay is usually the result of a dispute or financial difficulty. In either case, the factoring company will try to secure payment of the delivered load. In addition, this type of factoring has higher fees associated with it due to the risk the factoring company faces.

How is freight factoring different than a bank loan?

Freight factoring is different than a commercial line of credit because:

What is a Factoring Line of Credit?

Factoring Line of Credit provides a line of credit equaling a percentage of the combined book of account receivables. The line can be drawn on as needed and fees are applied to funds withdrawn along with a small administrative fee. This form of factoring is cost effective and beneficial to larger fleets.

Qualifying for our Factoring Line of Credit is based on the creditworthiness of your customers.

Commercial institutions investigate your financial history, credit rating, assets on hand, liabilities, and require you secure the line of credit against a personal or business asset to access.

How long does it take to get initial funding?

After signing our agreement, first funding will take no more than 48 hours and invoices will process even faster going forward.

When will I receive funding?

Funds will be transferred directly into your eCapital account immediately after approval of submitted invoice and signed bill of lading.

How will my customers remit payment to eCapital?

Upon completing our onboarding process your customers will be provided an email informing them of your company’s relationship to eCapital. This email will introduce your customers to eCapital and provide specific payment instructions. All future invoices to your customers will include a notice to remit payment to eCapital.

This email is known as Notice of Assignment – it is a legal document that must be sent to customers before we can fund you.

What is the importance of a credit score?

Understanding the credit score of your customers provides you certainty on their payment cycle. With this information, you can predict your business’s cash flow needs and make decisions with regard to:

Find your customer’s credit score with our Free Credit Check Tool. This service is free for our clients.

What services does eCapital offer?

We have developed a comprehensive package of specialized services for trucking companies:

What is a fuel card for truckers?

Our fuel card for truckers provides discount pricing and extended credit on fuel at major truck stops in America. It is a secure and simple way for drivers to receive cash and pay for expenses such as fuel, repairs, scales, hotel rooms and other necessities.

Our Fuel Discount Program provides:

What is cash flow and why is it important?

Cash flow is the incoming and outgoing capital during the course of operating. It can be received and paid in the form of checks, email money transfers, PayPal payments, credit card payments, etc. Once honored, these amounts become cash flow. It is different from revenues and expenses as they are reported on your income statement as they are incurred. They are not considered cash in the bank.

It is important to maintain positive cash flow to support operations and pay expenses – in the trucking industry it can take 30-90 days for customers to pay.

What is the difference between factoring vs. line of credit?

Freight factoring is designed specifically for trucking companies:

A commercial line of credit is designed for the benefit of the bank:

Do I need to factor every load or can I pick and choose?

If you Factor a load from a particular customer, you must factor all the loads from that customer. You can choose which customers to factor, but not “which invoices to factor”.

How is freight factoring cost-effective?

Freight Factoring saves you money by providing the flexibility to:

How can factoring grow my trucking business?

Trucking is a capital intense industry and growing fleet needs access to capital. Freight Factoring provides you the capital needed to:

Factoring your invoices provides the opportunity to focus on other aspects of your business like staffing, finding loads and fleet management.

How can factoring help my cash flow forecasting?

The benefit of freight factoring is that it allows you to get funds immediately after approval of submitted invoice and signed bill of lading. Trucking companies who do not use Freight Factoring are left on uncertain payment terms as shippers and freight brokers can pay between 30-90 days.

How does freight factoring help my startup trucking company?

Freight Factoring provides trucking startup companies with immediate access to capital. With this, you avoid the 30 to 90 day payment period common in the trucking industry. If you do business with creditworthy customers then you qualify for freight factoring.

Can I start freight factoring despite past bankruptcy?

You can still qualify for freight factoring because factoring is based on the creditworthiness of your customers. It’s one of the reasons why freight factoring is more convenient than traditional financing from banks.

How do I get started with freight factoring?

Start Freight Factoring by calling 866.251.9823 or clicking “Get a Quote” above. A factoring consultant will be in contact within hours of the submission.

Upon initial contact we will review:

From this information we will create a freight factoring program tailored to your business’s financial needs.