This podcast episode, hosted by Bob Shultz, publisher and co-founder of TCLM, and featuring Factoring Specialist, Chris Lehnes provides an in-depth exploration of factoring as a financing solution for businesses seeking improved liquidity.
Factoring is explained as the sale of a company’s accounts receivable to a third-party factor, which enables immediate cash flow without incurring debt. Lehnes outlines how the process works, from invoice verification to advancing 75 to 90 percent of its value and later releasing the balance upon customer payment, while also discussing the operational benefits, such as the factor handling collections. The conversation covers critical distinctions between recourse and non-recourse factoring, cost structures, and flexibility in factoring arrangements, including selective factoring by customer or invoice. The fees, typically 1.5 to 3 percent per month, are examined alongside aspects that influence pricing, such as credit risk, invoice volume, and payment timelines.
The discussion also offers practical guidance for businesses considering factoring, highlighting its applicability primarily for B2B and B2G companies with strong customers and urgent funding needs not being met by banks. Lehnnes addresses common concerns about customer perception, explaining that large enterprise clients are accustomed to factoring arrangements, and he emphasizes good receivables management practices to improve eligibility. The episode concludes with insights into Versant Funding’s unique position in the market, emphasizing its true non-recourse model, lack of reliance on traditional borrower qualifications, flexibility in factoring older receivables, and willingness to work with high customer concentration. This positions factoring not only as a cash flow solution but also as a strategic tool for growth, bridging financing gaps, and providing operational stability
Contact Factoring Specialist, Chris Lehnes
