Invoice Factoring in New Jersey
New Jersey Invoice Factoring
The Garden State is one of the more diverse states for business you’ll find. The heavily industrial areas around northern New Jersey are home to many manufacturing companies where beaches on the east coast have distributors providing food and beverages for the many bars and restaurants that service summer tourists. The state also has some of the top academic and technical schools in the country in Princeton University and Stevens Tech-fueling the entrepreneurial spirit among its graduates. One problem many startups and small businesses face is inconsistent cash flow, which can lead to negative net working capital. Invoice factoring in New Jersey may be the answer.
New companies often don’t have the necessary financial documents (profit and loss statements) or operating history to qualify for lower cost financing. Many turn to expensive alternatives such as merchant cash advances.
Instead of paying outrageous interest rates or coughing up equity ownership in their company, an increasing number are opting for other financing sources including accounts receivable financing and invoice factoring.
Major Invoice Factoring Industries in New Jersey:
- Advanced Manufacturing
- Health Care
New Jersey has one of the brightest workforce’s in the United States, with nearly 37% of the workforce having bachelor’s degrees.1 As such, the more advanced manufacturing industries such as chemicals and computer electronics are flourishing.
New Jersey’s northeast location makes it a perfect hub for transportation industries including truckers, rail and shipping. The Garden State Parkway, New Jersey Turnpike, Amtrak and New Jersey Transit all give New Jersey a leg up on other states in logistics.
The health care and pharmaceutical industries are plentiful in New Jersey as well. Companies such as Bristol-Myers Squibb have headquarters in the Garden State. But the health care insurers can be notorious late payers. Medical factoring is an option for companies that invoice private providers or Medicare and Medicaid.
Invoice Factoring Companies in New Jersey
But these industries often mean payment delays. As such, there are a large number of invoice factoring companies helping small businesses improve cash flow. Below are some companies with headquarters in New Jersey:
- Crossroads Capital (Middletown)
- North Mill Capital (Princeton)
- Oak Hill Capital (Red Bank)
These firms service a wide variety of businesses such as manufacturers, distributors, staffing companies and transportation. As such, there are a number of trucking factoring companies and even online factors such as Fundbox and Bluevine. The business clients of these firms typically are high growth companies (often start-ups) that operate with limited financial information and have losses and even negative equity.
Some of these companies offer advance rates up to 90% on qualifying invoices, bridge and loan refinancing. The typical contracts have a minimum of six months but can go up to three years. While long-term contracts are generally frowned upon by new customers, they can actually offer the best terms and lowest invoice factoring rates. That is, with the right factoring company of course. The wrong factor can turn a long term contract into a nightmare.
There are certainly other factoring companies and alternative lenders in the state of New Jersey. We typically, prefer factors that are headquartered in the state since they understand the industry and are connected to resources that can serve their customers the best. These three companies are all headquartered in New Jersey and are members of the industry’s main trade association, the IFA.
Ancillary invoice financing services include collection phone calls, lock box services, online reporting and credit monitoring for your clients. Your business can be funded in as early as one week from initial contact with factoring. Once approved, factoring invoices can provide funds same day.
Asset based lending
Their asset based lending solutions can improve cash flow and net working capital. Depending on the industry, ABL programs can tap inventory and equipment, as well as accounts receivable, as collateral. Often, ABL programs advance up to 50% on inventory and up to 80% on machinery and equipment. Keep in mind, some of these facilities may require a personal guarantor so make sure you conduct proper due diligence.
If your business doesn’t qualify for a bank loan or small business line of credit, consider ar factoring, the sale of outstanding invoices to a third party (the aptly-named invoice factoring company)at a discount to their face value.
Since this is an asset sale, your business will incur no additional debt from this method of small business funding. If the bond bubble ever bursts and interest rates start to shoot higher, invoice financing could become a preeminent source of capital for small businesses.
If your small business is looking for financing solutions to cash flow constraints, request a free quote on invoice factoring in New Jersey today.