Factoring in Albany, NY

- About Albany
- Factoring Information
- How Does It Work?
- Factoring Terms Glossary

About Albany, NY

Albany is the capital of the State of New York and the county seat of Albany County. Albany lies 136 miles (219 km) north of New York City, and slightly to the south of the juncture of the Mohawk and Hudson Rivers. The city's estimated 2006 population was 95,995.

Albany has close ties with the nearby cities of Troy and Schenectady, forming a region called the Capital District. This area makes up the bulk of the Albany-Schenectady-Troy Metropolitan Statistical Area (MSA) with a population of 850,957, making it the fourth largest urban area in New York State, and the 56th largest MSA in the United States.

The Albany-Schenectady-Amsterdam, NY CSA, consists of the Albany-Schenectady-Troy MSA, the Glens Falls MSA, and the Amsterdam MSA. Using this definition, the area has a population (as of 2006) of 1,147,850, making it the third largest metropolitan area in New York State and aside from New York City CSA the only area that has shown any population growth. The Albany-Schenectady-Amsterdam, NY CSA is also the 36th largest in the nation.

Albany is built on the site of the Dutch Fort Orange and its surrounding community of Beverwyck. The English acquired the site from the Dutch in 1664 and renamed it Albany, in honor of James II, Duke of Albany. A 1686 document issued by Thomas Dongan granted Albany its official charter.

Today, the city is a major center for government and education.

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Factoring Information

Factoring is often used synonymously with accounts receivable financing. Factoring is a form of commercial finance whereby a business sells its accounts receivable (in the form of invoices) at a discount. Effectively, the business is no longer dependent on the conversion of accounts receivable to cash from the actual payment from their customers, which takes place on typical 30 to 90 day terms. Businesses benefit from the acceleration of cash flow by obtaining cash from the factor equal to the face value of the sold accounts receivable, less a factor's fee.

Factoring is considered off balance sheet financing in that it is not a form of debt or a form of equity. This fact makes factoring more attainable than traditional bank and equity financing.

There are usually three parties involved when an invoice is factored:

• Seller of the product or service who originates the invoice.
• Debtor is the customer of the seller (i.e., the recipient of the invoice for services
  rendered who promises to pay the balance within the agreed payment terms).
• Factor (SL Business Capital Corporation)

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How Does It Work?

The initial step is for your company to complete a simple application and supply some requested documentation.  Once the application and all documents are received, “due diligence” as to the credit worthiness of your customers will take just a few days to complete for application approval.  Once your factoring account is open cash advances against valid outstanding commercial invoices are wired to your company within 24 to 48 hours on a regular basis upon your instruction. Working capital is then in your hands ready to apply as needed.

Your cash advance against each invoice will consist of 80 - 90% of the invoice face amount.  The remaining portion of the invoice is retained by the factor and is called a “reserve”. You will later receive the reserve once your customer has paid the invoice in full.  The factor deducts a small discount fee from the reserve.  The amount of cash advance and discount are directly related to your monthly sales volume and the credit standing of your customers (not your credit standing). The discount is also based on various risk factors such as the length of time your customer takes to pay the invoice in full.  You may certainly discuss the aspects of the factoring process with our associates. 

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Factoring Terms Glossary

Factoring has its own specialized jargon -- commonly used terms that are unfamiliar to people outside the industry. To put you on the inside track, we have included a glossary of some of the most commonly used terms and abbreviations.

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