Advantages of the Exchange vs. Factoring
The Receivables Exchange is often compared to factoring, but the two financing methods are very different. Factoring locks you into long-term contracts with monthly minimums. Factoring also requires personal guarantees, all-asset liens and full notification to customers.
| Factoring | The Receivables Exchange |
|---|---|
| Costly: Factors charge high fees. | Affordable: 85%-93% Average Advance Rate; 1.0% Average Discount Rate |
| Little Control: Your customer is notified and the factor owns the relationship. | Full Control: Your customers don't know that you have sold your invoices. |
| High Risk: Require personal guarantees, restrictive covenants and all-asset liens. | Low Risk: No personal guarantees, covenants, all-asset liens, and does not subordinate debt. We only take a lien on the receivables you are selling. |
| Extremely Inflexible: Long-term contracts and rates are locked in. You must factor all your eligible receivables. | Superior Flexibility: Choose which receivables to sell and use the Exchange when you need it. |
| Fast: Advances are limited to one or two a week. | Fast: Transactions happen in real time, cash in as little as 24 hours. |