Accounts Receivable Funding

Graduate ProgramPeak Funding is a premier lender providing financing for the small to medium sized businesses nationwide.

Accounts receivable financing, or Factoring, is the purchase of accounts receivable invoices at a discount. If you offer your services or products to companies that take 30, 60, or even 90 days, Peak Funding will purchase these accounts at a discount and your company can have the money in as little as 24 hours. Of course, with increased cash flow you can take advantage of discounts by paying your vendors quicker, you can take advantage of seasonal demands instead of worrying about how to finance them, or you may simply use the cash flow for potential growth within the company.

The impact on profits due to factoring is readily seen by comparing the bottom lines of before and after factoring as shown forth in this classical example:

Impact of Factoring on Profits    
  Before Factoring After Factoring
Revenues $100,000 $200,000
Cost of Goods/Services Sold $65,000(65%) $130,000(65%)
Gross Profit $35,000(35%) $70,000(35%)
Variable Costs $10,000(10%) $20,000(10%)
Fixed Costs $20,000 $20,000
Cost of Factoring N/A $5,000
Net Profit $5,000 $15,000
     
     

The profit after factoring increased both dollar-wise (from $5,000 to $15,000) and performance wise(from 5% to 7.5%). Thus by investing $5,000 in factoring , the net profit increased $10,000 making the return on investment (ROI) in factoring to be:
R.O.I. = (10,000/5,000) x 100% = 200%