Situation:
We were factoring our receivables with a factoring company and paying a flat 3% fee. We were forced to take a draw on the batch of invoices each time we submitted them. Oftentimes, we had more money in the bank than we needed, but we were paying the flat 3% fee on all our receivables.

Solution:
We moved to 's program and reduced our per invoice cost to 1.75%. The first year on this program, we saved over $125,000.

Our Account Representative set us up on a graduated fee schedule, instead of the flat rate schedule we previously had. He taught us to submit our invoices at the time they are created, but not to take an advance until we needed the funds, and then only to take the amount we needed. By not taking an advance until the funds were needed, we shortened the time that it actually took for the invoice to pay. Because we were on a graduated discount fee, this shortened time significantly reduced our per-invoice cost.

We put all our invoices into the system when they were created and then we "seasoned" them, knowing that they were available to us whenever we needed the funds. As long as an invoice was in the system and not advanced, it did not accrue any fees or charges. Thus, we were able to hold down our per-invoice cost by managing the timing of the advances and the particular invoices we chose to advance within the system. Whenever we needed cash, we electronically selected the invoices that had been outstanding the longest for advance. The advance was completed and the funds immediately placed into our account.

The invoices selected, since they had already been in the system for up to 30 days, were only outstanding for an additional 30 days before payment was received from our customers. As such, our discount fee was reduced from a flat 3% to approximately 1.75%.

Summary:

• We moved from a factoring relationship in which we paid a 3% flat discount on all invoices to 's product, which reduced our per-invoice cost to 1.75%
• Making this change saved us over $125,000 by the end of our first year.
• We had been with the factoring company for 4 years. If we had been with instead, we would have saved $125,000 per year — or a half a million dollars.