CIT Trade Finance is one of the largest factoring companies in the United States. We have been in this business since 1928, making invoice factoring one of the oldest businesses of CIT.
CIT’s account receivable factoring includes four services:
- Credit protection and advice
- Accounts receivable bookkeeping, including EDI invoice and payment processing
- Collections, cash management and lockbox processing
- Accounts receivable financing, if needed
At CIT, we typically provide non-recourse factoring. We also call this invoice factoring, accounts receivable factoring, or AR factoring. We also provide notification factoring and non-notification factoring.
Companies use factoring services for a number of reasons. Here are some of them:
- To protect themselves against bad debt losses
- Click here to learn about minimizing bad debt losses
- To increase the effectiveness of their collections
- Click here to learn about how to manage collections efficiently
- To enhance their company’s liquidity
- To outsource the credit and accounts receivable management function to a service provider, like CIT, that can perform these functions efficiently and cost-effectively
- To eliminate the need for employee overhead (and benefits and other costs) when they are trying to keep costs down.
What types of companies can benefit from accounts receivable factoring?
Companies that can benefit from factoring include those that are:
- Rapidly growing
- Concerned about adding fixed costs
- Have a lengthy manufacturing cycle
- Strained by slow turnover of receivables
- Hurt by high bad debt losses
- Saddled with a large customer concentration
What costs are involved with accounts receivable factoring services?
There are two primary costs associated with factoring: the factoring commission and, if applicable, the interest charged on advances against receivables. The factoring commission is a percentage of factored volume, and is based upon these variables:
- Annual factored sales volume
- Average invoice size
- Terms of sale
- Number and type of customers
CIT’s interest rate is competitive with short-term revolving credit interest rates. Interest is charged monthly at a rate tied to major interest rate indices, usually with the addition of a margin, based on the daily amount advanced during that month.
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