The Facts: FTRANS v. Factoring

The most common question we get at FTRANS is:  how is your solution different from factoring?  Before we get into that, let’s recap what types of factoring are out there: 

1.  True factoring is the purchase of accounts by a third party and a transfer of risk from the SMB to the factor.  Not only is it very expensive, but it also puts your reputation at risk, as factoring invoices is done on a one-off basis and there is no incentive for a factor to maintain your solid client relationship.
2. ‘Receivables Discounting,’ an alternative kind of factoring, that you are liable for and is now more common than True Factoring.  It’s expensive as well, and again, there is no incentive for a receivables discounter to carefully manager the relationship with your buyer. 

Now that doesn’t sound like the best way to run a business.  Let’s break it down more and look at the 5 key ways FTRANS is different from factoring: 

1. FTRANS is significantly less expensive than factoring and accounts receivable discounting.  Traditional factoring costs as much as 20 % – 30% of an invoice.  FTRANS costs significantly less than that.
2. FTRANS is a customer-friendly alternative to factoring.  With FTRANS, you have the discretion to maintain your customer relationships.  You still send the invoices, and your buyer sends payment to a lockbox, addressed to you.
3.  Unlike factoring, where the SMB makes discrete decisions on factoring each invoice, our system facilitates the capture of 100% of your A/R.  You see a continuous view of your cash availability position with the bank, and you can drill down into the detail of your credit administration.
4. Due to the credit background investigation completed by FTRANS, you have ongoing significantly enhanced insight into the credit quality of your buyers.
5. Any disputes you face as a borrower, you now have the assistance of FTRANS as a professional third party.

On the other hand, FTRANS preserves a key advantage of factoring – its operational simplicity.  We provide you with virtually the same ease-of-use as accepting a credit card for payment.  FTRANS designed this new approach in B2B trade credit to be simple, safe, and based on familiar business processes.