Factoring in Rochester, NY

- About Rochester
- Factoring Information
- How Does It Work?
- Factoring Terms Glossary

About Rochester, NY

Rochester, also known as both The Flour City and The Flower City, is a city in Monroe County, New York, United States. As of the 2000 census, Rochester had a population of 219,773. As of 2004, the population given by the U.S. Census Bureau was 212,481, making this the third largest city in New York State. Rochester is also the county seat for Monroe County.

The City of Rochester is at the center of a larger Metropolitan Area which encompasses and extends past Monroe County and includes Genesee County, Livingston County, Ontario County, Orleans County, and Wayne County. This larger conurbation, or Metropolitan Area, has a population of 1,037,831 people as of the 2000 Census. As of July 1, 2005, this population rose slightly to 1,039,028. Principal suburbs of the city include Brighton, Chili, East Rochester, Fairport, Gates, Greece, Henrietta, Irondequoit, Penfield, Pittsford, Victor and Webster.

The current Mayor of Rochester is Robert Duffy.

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Factoring Information

Factoring is often used synonymously with accounts receivable financing. Factoring is a form of commercial finance whereby a business sells its accounts receivable (in the form of invoices) at a discount. Effectively, the business is no longer dependent on the conversion of accounts receivable to cash from the actual payment from their customers, which takes place on typical 30 to 90 day terms. Businesses benefit from the acceleration of cash flow by obtaining cash from the factor equal to the face value of the sold accounts receivable, less a factor's fee.

Factoring is considered off balance sheet financing in that it is not a form of debt or a form of equity. This fact makes factoring more attainable than traditional bank and equity financing.

There are usually three parties involved when an invoice is factored:

• Seller of the product or service who originates the invoice.
• Debtor is the customer of the seller (i.e., the recipient of the invoice for services
  rendered who promises to pay the balance within the agreed payment terms).
• Factor (SL Business Capital Corporation)

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How Does It Work?

The initial step is for your company to complete a simple application and supply some requested documentation.  Once the application and all documents are received, “due diligence” as to the credit worthiness of your customers will take just a few days to complete for application approval.  Once your factoring account is open cash advances against valid outstanding commercial invoices are wired to your company within 24 to 48 hours on a regular basis upon your instruction. Working capital is then in your hands ready to apply as needed.

Your cash advance against each invoice will consist of 80 - 90% of the invoice face amount.  The remaining portion of the invoice is retained by the factor and is called a “reserve”. You will later receive the reserve once your customer has paid the invoice in full.  The factor deducts a small discount fee from the reserve.  The amount of cash advance and discount are directly related to your monthly sales volume and the credit standing of your customers (not your credit standing). The discount is also based on various risk factors such as the length of time your customer takes to pay the invoice in full.  You may certainly discuss the aspects of the factoring process with our associates. 

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Factoring Terms Glossary

Factoring has its own specialized jargon -- commonly used terms that are unfamiliar to people outside the industry. To put you on the inside track, we have included a glossary of some of the most commonly used terms and abbreviations.

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