Businesses that sell on credit sometimes experience a cash flow gap when waiting on customer payment. Cash flow is the lifeblood of a business, and interruptions can derail operations.
Some small business owners turn to invoice factoring to convert unpaid invoices into immediate working capital. AmeriFactors is an invoice factoring company with over three decades of experience in providing fast cash flow.
However, the company might not be the right fit for every small business. This guide covers the benefits, drawbacks, and application process to help you decide if AmeriFactors suits your company.
Specifically, we’ll answer these questions and more:
AmeriFactors is an accounts receivable financing (aka invoice factoring) company. It helps small businesses with cash flow issues by converting unpaid invoices into immediate working capital.
The company offers industry expertise as it’s been in operation since 1991. AmeriFactors is based in Celebration, Florida, and is a wholly-owned subsidiary of Gulf Coast Bank.
The company offers accounts receivable (A/R) financing with the following features:
A/R factoring is a business-to-business transaction where the company purchases your unpaid invoices at a discount in exchange for an immediate business cash advance. The company advances 80%-98% of the invoice value depending on the factoring agreement.
It uses non-recourse factoring, meaning it assumes the risk for non-paying customers. If a small business owner factors an invoice and the customer never pays, the business owner is not required to pay back the advance amount. The company’s website states some restrictions apply, so ensure you check the non-recourse policy before agreeing.
Once your customers pay their invoice, the factoring company sends you the remaining amount minus its fee. Its factoring fees start at 2% per invoice term. So, if the invoice is on net-30 terms, it applies the 2% fee when first factoring the invoices, and then again, for each 30-day period it goes unpaid.
Here are the specific steps in the process:
ABC Company factors an invoice on net-30 terms worth $5,000. AmeriFactors sends ABC an advance of $4,750 (95%) within 4 – 24 hours of submitting the invoice. ABC Company’s customer pays the total $5,000 to AmeriFactors.
After receiving the payment, AmeriFactors keeps its fee of $100 (2%). It then sends the remaining $150 to ABC Company.
AmeriFactors provides additional services to help its customers succeed. Its Business Development Officers (BDOs) work with customers to develop customized financing plans. Account Executives (AEs) provide customer service to assist with the factoring process.
The company doesn’t list any set qualifications. It accepts applications from startups and established businesses.
Some online reviews suggested eligible companies need a minimum of $150k per year, but we couldn’t confirm that on the AmeriFactors website. It bases credit decisions on your customers’ credit instead of yours since they’re the source of repayment.
The actual factoring fee you receive is based on your business and the creditworthiness of your customers. The company will provide a credit check on your customers, which can also help you weed out bad-paying customers.
Some reviews suggest that AmeriFactors provides additional financing products, like business cash advances (aka merchant cash advances) and asset-based lending (ABL). However, the only information we could find was about AmeriFactors’ accounts receivable financing.
The company does offer a business loan affiliate program. ISOs and business loan brokers can offer the company’s factoring services to their small business clients.
The application process is quick. Complete the online application. A Business Development Officer will reach out within 4 -6 business hours to finalize the process.
Your account gets set up after approval. It can take up to 24 hours to receive the funds for the first invoice you factor. After that, you can receive the funds for factored invoices within four business hours.
The repayment process is simple. Your customers pay their invoice to AmeriFactors, which then releases the remaining amount minus its fee.
The company offers over three decades of experience in accounts receivable financing. Customers can benefit from the company’s expertise and strong management team.
AmeriFactors provides a convenient online application. Customers get connected with a Business Development Officer.
It can provide up to 98% of the invoice amount. Once approved, you can receive the funds within 4 -24 hours. It also offers non-recourse factoring, so you take less of a risk.
Invoice factoring can be an expensive way to gain business funding. However, it’s a common practice and has existed in some form for a while in business.
Some reviews suggest the company requires a personal guarantee. While its website does not mention requiring a personal guarantee, a customer complaint stated AmeriFactors filed a UCC lien against them.
The company doesn’t provide many other details about its funding programs. While some online reviews suggested additional financial products, its website only advertises invoice factoring.
Pros:
Cons:
Yes, AmeriFactors is a legitimate invoice factoring company. While it’s not Better Business Bureau (BBB) accredited, it does have an A+ rating on the watchdog site. It is a verified company on Trustpilot.
The company has few online reviews, but its ratings are high among what’s available. It has a 4.4 out of 5 on 12 Trustpilot reviews and a 4.5 out of 5 on 31 Google reviews.
The positive reviews discuss the ease of the application process and the expertise of the BDO team. Many reviews are from customers who’ve worked with AmeriFactors for a while.
The few negative reviews complained about customer service or charges. One user said the company charged the factoring fee twice, but that was for a late payment from the customer. Another user said the company filed a UCC lien against them even though they tried canceling the factoring service.
We should note that the company actively responds to customer complaints. It explained the terms and conditions to both the customer who had a second factoring fee charge and the customer who complained about the UCC lien.
Since it doesn’t publish qualifications, you won’t know if you qualify until you apply. AmeriFactors might not approve an application if it deems the business’s customers are not creditworthy.
If you get declined, you should receive a denial letter explaining why. You can also contact them for more information.
Fortunately, many alternative lenders are available if AmeriFactors doesn’t work for your business. Several offer invoice factoring services.
You might also be interested in one of the following small business funding options:
AmeriFactors is best suited for credit-challenged small businesses seeking to quickly turn the unpaid invoices in accounts receivable into working capital to support cash flow and operations. It provides high advance rates and competitive factoring fees.
Established small businesses with excellent credit and high annual revenue can likely qualify for more advantageous small business loans. However, factoring is technically not a loan and isn’t recorded as debt on the balance sheet, so it could be a viable option if you have a current loan that doesn’t allow stacking.
Based on user reviews, products, and available information, we rate AmeriFactors at 4 out of 5. It has excellent experience in the industry and good customer service marks, but the lack of other funding products and upfront information are concerns.
Disclaimer: The Amerifactors trademark is owned by AmeriFactors® Financial Group, LLC, and its use herein is for reference purposes only, and it does not indicate sponsorship or endorsement from AmeriFactors® Financial Group, LLC.
