ABCSHARES

Instead of waiting 30, 60 or 90 days for payment from hospitals, physicians' offices, nursing homes and other healthcare institutions, businesses can receive cash within 24 hours for goods or services--through the sale of their accounts receivable to ABC. The sale of receivables, known as 'factoring', provides an effective source of cash for growth, or other activities, when current working capital and alternative capital sources are inadequate.

Please take a few minutes and follow the links below for the details on how factoring can benefit your company.

- What is Factoring?
- Is Factoring for You?
- Factoring - Step by Step
- Benefits of Factoring
- What Will My Customers Think?
- Impact on Bottom Line
- Factoring Terminology

What is Factoring?

Factoring is converting the accounts receivable of a business into cash by selling outstanding invoices to a 'factor' (factoring company) for a discount. Accounts receivable factoring gives the business immediate cash to manage its operations more efficiently.

Many businesses have not considered accounts receivable factoring when looking for financing, possibly because they do not understand it. However, factoring is one of the oldest methods of providing working capital to help businesses solve their cash flow needs.

Cash flow problems often occur at the early stages of business development or during periods of rapid growth when completed work is unpaid for 30, 60, or 90 days after issuing the invoice. Thus, businesses often apply for small business loans.

However, conventional borrowing increases business expenses and normally requires additional collateral. Some companies--especially smaller ones--are turned down by banks because of loan underwriting criteria. Equity financing is generally harder to find than debt financing. And, once found, it takes longer to arrange.

With factoring, instead of analyzing the applicant's financial statements, PRN Funding, the factoring company, evaluates the strength of the accounts receivable. If the business has a product or service that it provides to a creditworthy customer, then the business is a candidate for factoring.

Accounts receivable factoring does not create debt or require additional collateral. It is very simple to use. Cash advances from 80% of the invoiced amount, depending on the customer and volume of business, can normally be obtained in 24 hours or less--and as often as the business has outstanding invoices and needs more cash.

With the cash flow problem solved, the business has the working capital to pay salaries, reduce debt, improve vendor relations and focus on critical success factors--operations, sales and growth.

Is Factoring For You?

Would you rather have your cash immediately rather than waiting 30 to 60 days or longer to receive payment?
Is too much of your available capital tied up in accounts receivable?
Do you have a profitable business that is sometimes short of cash?
Do you have creditworthy customers that require you to wait 30, 60 or even 90 days for payment?
Are you spending too much time tracking and collecting your accounts receivable?
Have you missed a growth opportunity because your cash was tied up or you did not want to take on a partner?
Has a bank rejected your loan application or required you to pledge personal assets as collateral?
Could your business grow if you had more available working capital?
Are your receivables available to be collateralized? (They have not been pledged to a lender or other entity).

If you answer YES to any or all these questions then FACTORING is absolutely a solution for your business!

Factoring Step by Step

How Factoring Works

Before Your Accounts Receivable Can Be Factored

• You fill out an application online.
• We review your application immediately. If approved, we will forward legal documentation for your review and approval.
• When you return these documents, we review your company's background for UCC liens, tax liens, judgment liens, etc. This review can typically be completed within 5 days.
• When the review is satisfactory and complete, funding can begin immediately.

The On-Going Process

To simplify and speed up the purchase of your accounts receivable, it is best to provide a comprehensive listing of your customers who are likely to be factored. This allows for pre-approval of their credit and timely payment of your funds.

Benefits of Factoring

Accounts Receivable Factoring Services - Benefits

Accounts Receivables Factoring services with PRN Funding can benefit small and medium sized companies serving healthcare institutions in many ways:

IMMEDIATE CASH - We advance cash on your qualified receivables in less than 24 hours.

ELIMINATE BAD DEBT - ABC's non-recourse program assumes the risk of bad debt, eliminating any expense from your income statement.

PROFESSIONAL DEBT COLLECTIONS - PRN Funding handles debt collections in a professional and productive manner, allowing your staff to focus on high value-added activities.

INVOICE PROCESSING - PRN Funding handles invoice processing, including posting invoices to a computer, depositing checks, entering payments, and producing regular reports.

ELIMINATE OVERHEAD - You greatly reduce your current overhead cost associated with processing invoices and you eliminate the overhead cost of handling collections.

OFFER CREDIT TERMS TO CUSTOMERS - You can offer credit terms to your customers to increase your sales without negatively impacting your cash flow.

UNLIMITED CAPITAL - Factoring is the only source of business financing that grows with your sales. As sales increase, more money becomes immediately available to you.

TAKE ADVANTAGE OF EARLY PAYMENT DISCOUNTS - If you can save two percent of your cost by paying bills within ten days, this can help to pay for factoring.

NO LIABILITY ON YOUR BALANCE SHEET - Factoring is not a small business loan; there is no debt, no monthly payments to 'muddy up' your balance sheet and make it hard to get other types of financing.

LEVERAGE OFF OF YOUR CUSTOMERS' CREDIT - You don't need good credit or a long-term operating history for factoring services; all you need is creditworthy customers.

FACTORING HELPS BUILD YOUR CREDIT - Once you begin factoring and have adequate cash flow, you'll be able to pay your vendors on time and establish a good credit rating that will let you get credit from other vendors and other financial institutions.

FACTORING IS QUICK AND EASY - The application is simple and fast to fill out. No history of profitability, no tax returns, personal financial statements, business plans or personal guarantees. So after initial approvals, you can be on your way to factoring in as little as 24 hours.

CONCENTRATE ON MARKETING AND SECURING NEW ACCOUNTS - Use the time you've spent on collections, administration, bookkeeping, talking to banks, etc. and spend it on marketing, sales and other business-growing activities.

NO LONG TERM OBLIGATION - There's no long-term contract to sign. And once approved, you can stop or start factoring at any time.

What Will My Customers Think?

This is a concern of many companies who are considering factoring companies as a finance strategy. However, establishing a credit line is a positive statement--not a negative statement--to make to your customers. Not all companies qualify for lines of credit.

Selling accounts receivable to generate cash is a finance method used by very large corporations worldwide, with the factoring service provided by the largest banks in the nation. In the past, only large corporations with millions of dollars in receivables per month qualified for factoring. Often factoring companies refused to work with smaller companies or companies with a large number of small invoices. Because factoring is widely known, your customers will view this as a positive ability on your part to secure financing, not as a problem with cash flow.

It's likely that many of your customers already deal with factoring companies and may not even be aware of it. Sometimes payments for invoices directed to a P.O. Box are actually going to a factor. Shell Oil , Georgia -Pacific, IBM and other substantial companies factor millions of dollars of their accounts receivables every year.

Financing obtained through the sale of accounts receivables factoring is most often used by a firm to expand and take on larger projects; not merely for cash flow or payroll. Now that this service is available to companies like yours, you can enjoy both the perception and the reality of being a growing company, moving forward.

Impact On Bottom Line

Increasing your cash position allows your company to increase revenues and increase profits.

	Current Business	After Factoring
Annual Sales	$800,000	$1,200,000
Direct Labor (40%)
Gross Margin	$480,00	$720,00
Indirect Labor	$80,00	$100,00
Overhead	$80,00	$100,00
Cost of Factoring	N/A	$42,00
Net Profit	$320,000	$478,000
Net Additional Income Made Possible Through Accounts Receivable Factoring	$158,000

Factor Your Invoices Right Now!

Also, while other factoring companies require you to snail-mail your invoices to them before they fund, with ABC's factoring partners, online invoice creation technology, your invoices are ready for mailing to your customers seconds after you create them, dramatically speeding up funding.

American Bancshares Corporation Difference:

• Flexible Factoring:

No initial setup fees
ABC purchases its clients invoices on a transaction-by-transaction basis
No minimum requirements
Submit as many invoices in any dollar amount you wish whenever you need Immediate Cash
Each transaction is accounted for separately from all other transactions
All of the invoices you submit on a given day comprise one transactio

Factoring Terminology

Account Creditor - You, the Client and provider of goods or service.

Advance Rate - Money provided immediately to the company factoring its accounts receivable--expressed as a percentage of the total invoice amount.

Client - The provider of goods or services to 'customer'.

Customer - The purchaser of goods or services responsible for paying invoice.

Debt Financing - Capital secured in exchange for a commitment to pay interest in addition to the principal amount borrowed.

Discount Fee - A fee assessed by a company that purchases accounts receivable. The discount fee is determined by the size of the invoice, the length of time it takes to collect the funds and the creditworthiness of the customer, not the company selling the receivable.

Equity Financing - Capital secured in exchange for an ownership interest in the company.

Factor - A company that provides operating capital to businesses by purchasing their accounts receivable.

Factoring - The business of purchasing and collecting accounts receivable.

Non-Recourse - Generally, accounts purchased by the factor remain the factor's accounts and do not revert to the account creditor if unpaid. The factor accepts full credit risk for any and all accounts that it purchases. ABC only purchases invoices on a non-recourse basis; therefore taking full credit risk for your customers.

Rebate - A bonus paid back to you as a result of prompt paying of receivables by your customer.

Recourse - An established time frame in which other factors will return non-performing, unpaid invoices to the account creditor. However, PRN Funding only purchases invoices on a non-recourse basis; therefore taking full credit risk.

Reserve - Amount of money that is not immediately provided to the company factoring its accounts receivable when the account is purchased by the factor, expressed as a percentage of the total invoice amount.