factoring mca infographic v3 - foley business capital...in interest on each invoice for the...

How do Factoring and MCAs Compare? When compared side by side, it's easy to see which path leads to success - rather than a dead end. You’re just getting paid more quickly for the money you’re already due – not accumulating debt. A quick route to cash – with a faster payback cycle than a traditional loan MCAs have very aggressive terms and are typically paid off in three months to two years. Not a loan – but payment for services rendered Factoring MCAs A reputable factoring provider wants to help you succeed – not stick you with confusing contracts and hidden fees. Contracts are rigid and confusing Hidden fees and penalties can make your total payback amount skyrocket if you begin to miss payments. Programs are flexible and growth oriented This keeps your money where it belongs – in your pocket. Interest rates are high Rates start at 18-50 percent and can quickly climb above 100% if you default. Interest rates are low Factored invoices are paid within 24 hours – instead of the standard 30-45 day payment cycle of most shippers and brokers. Often create a cycle of debt Payments are made daily or weekly according to future projected sales. So if sales are low one month, you could be forced to refinance quickly. Creates a steady flow of cash INVOICE ! Need Fast Cash? Whether You Build Wealth or Accumulate Debt Depends on the Provider you Choose CASE STUDY With the best of intentions, we had a factoring client that took out a sizeable Merchant Cash Advance (MCA) to help them grow their business. Because the payments were so high, the company quickly found it difficult to make the required weekly payments - leaving them cash strapped and in default. They turned to Foley to help reverse the cycle, but it was too late - once the additional penalties and fees were tacked on to the balance, the company owed almost triple the original loan amount. 150% The interest rates on MCAs that go into default can exceed 100% quickly, making the already high rates that come with these loans seem small in comparison % % % Consider this example: A six-truck company needs cash fast. They have a choice: sign a factoring agreement or secure an MCA. This is how each option impacts their financial security. Company B also needs quick cash but decides on an MCA of $90,000. The payback amount is 1.3 times the amount of the original loan and will be paid back daily via automatic bank withdrawals. Company A factors their monthly invoices in an amount equal to $90,000 to create a steady flow of cash into the business. They’ll pay 3.5% in interest on each invoice for the convenience of getting paid faster. Factoring MCAs Factoring total: $90,000 Interest rate: 3.5% You receive: $86,850 Total interest paid: $3,150 MCA total: $90,000 Interest rate: 33% You receive: $90,000 Total interest paid: $27,000 Enhance Cash Flow with Factoring With Foley as their financial partner, our top 10 factoring customers grew by nearly 300 percent in their first nine months with us. Free fuel advances No hidden fees Fuel discounts Free credit checks Let us be your partner in growth. Give us a call at (860) 815-0763 to learn how a personalized factoring program can benefit your business. foleybusinesscapital.com 14 $ $ $ X

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Page 1: factoring mca infographic v3 - Foley Business Capital...in interest on each invoice for the convenience of getting paid faster. Factoring MCAs Factoring total: $90,000 Interest rate:

How do Factoring and MCAs Compare?When compared side by side, it's easy to see which path

leads to success - rather than a dead end.

You’re just getting paid more quickly for the money you’re already due – not accumulating debt.

A quick route to cash – with a faster payback cycle than a traditional loan

MCAs have very aggressive terms and are typically paid off in three months to two years.

Not a loan – but payment for services rendered

Factoring MCAs

A reputable factoring provider wants to help you succeed – not stick you with confusing contracts and hidden fees.

Contracts are rigid and confusing

Hidden fees and penalties can make your total payback amount skyrocket if you begin to miss payments.

Programs are flexible and growth oriented

This keeps your money where it belongs – in your pocket.

Interest rates are highRates start at 18-50 percent and can quickly climb above 100% if you default.

Interest rates are low

Factored invoices are paid within 24 hours – instead of the standard 30-45 day payment cycle of most shippers and brokers.

Often create a cycle of debt

Payments are made daily or weekly according to future projected sales. So if sales are low one month, you could be forced to refinance quickly.

Creates a steady flow of cash

INVOICE

Need Fast Cash?Whether You Build Wealth or Accumulate Debt Depends on the Provider you Choose

CASE STUDYWith the best of intentions, we had a factoring client that took out a sizeable Merchant Cash Advance (MCA) to help them grow their business. Because the payments were so high, the company quickly found it difficult to make the required weekly payments - leaving them cash strapped and in default. They turned to Foley to help reverse the cycle, but it was too late - once the additional penalties and fees were tacked on to the balance, the company owed almost triple the original loan amount.

150%The interest rates on MCAs that go into default can exceed 100% quickly, making the already high rates that come with these loans seem small in comparison

% %

Consider this example:A six-truck company needs cash fast. They have a choice:

sign a factoring agreement or secure an MCA. This is how each option impacts their financial security.

Company B also needs quick cash but decides on an MCA of $90,000. The payback amount is 1.3 times the amount of the original loan and will be paid back daily via automatic bank withdrawals.

Company A factors their monthly invoices in an amount equal to $90,000 to create a steady flow of cash into the business. They’ll pay 3.5% in interest on each invoice for the convenience of getting paid faster.

Factoring MCAs

Factoring total: $90,000

Interest rate: 3.5%

You receive: $86,850

Total interest paid: $3,150

MCA total: $90,000

Interest rate: 33%

You receive: $90,000

Total interest paid: $27,000

Enhance Cash Flow with FactoringWith Foley as their financial partner, our top 10 factoring customers

grew by nearly 300 percent in their first nine months with us.

Free fuel advances