Apex Capital Has Been Busy

A Quick Update on Apex Capital

Apex Capital, also known as Apex Factoring, is a freight factoring company headquartered in Ft. Worth, Texas. A quick update is in order since the company has been quite busy since our last factoring company review was written.

Apex Capital Provides Freight Factoring Nationwide

Apex Capital provides freight factoring solutions for the transportation industry around the country, offering both recourse and non recourse factoring. Apex typically works with trucking companies, often independent, owner-operated rigs. As such, they compete with other trucking factoring companies including Fleet One Factoring, TAB Bank, OTR Capital and Riviera Finance for business.

Since 1995, Apex Capital has been factoring receivables for small and medium size fleet owners. One such client is Midnight Express, a husband and wife trucking team from Schenectady, New York (not far from Albany). Midnight Express runs a licensed and bonded freight hauling and trucking company. While it only has one single truck, the duo wants to maximize growth potential and keep their net working capital positive.

But doing so often requires additional financing. Getting a traditional bank loan would be trying for a company with a business that’s operated for just a few years (since November 2015 for Midnight Express).1 That is where an accounts receivable factoring company like Apex can provide tremendous benefit.

With invoice factoring, a business sells its outstanding invoices to a third-party, called a factoring company. The factor then typically takes care of the collections, so your business can focus on day-to-day operations.

Discounts and Benefits for Apex Capital Customers

If you decide to start factoring invoices with Apex, they offer many discounts and savings through a variety of partnerships. Their Apex Fuel Card Program is a fuel management system that is accepted at internet truck stops in the United States and Canada including Flying J, Speedway, Roady’s, Petro and TA (the largest full-service travel center company in the United States). This fleet card is designed to keep your trucking company’s operating expenses in check. There is also a discounted Federal Express and tire savings program.

Start Your Own Trucking Company through Apex Capital

If you have that independent streak and want to be in business for yourself, you should consider partnering with Apex Factoring. Specifically, if you’ve wondered how to start a trucking business, then Apex Capital can help with their guide to starting a trucking company. They partnership is invaluable and Apex files most of the paperwork and forms for you.

Apex Capital Offers Plenty of Free Resources

We would suggest anyone in the trucking industry to take a look at the company’s website and social media pages where they provide a variety of information on factoring rates, industry news and even human interest stories on truckers.

This is where we learned about the inspirational story of Charles Ray Bell, a truck driver from Delhi, Kentucky. He reportedly was living a very unhealthy lifestyle, probably stemming from a difficult childhood in and around foster homes.

But Bell wasn’t going to be defeated-he figured out a way to use the dreaded detention downtime into a positive. He started exercising, running to be exact. He even finished the 100-mile Florida Keys ultra-marathon which stretches all the way from Key Largo to Key West.2 Wow!

One thing we love to see is that the company is involved in their community- and gives back. Their participation in Cancer Care Service walks, the Texas Pythian Home and Junior Achievement is a testament to this.

If things continue to go so well we may have to place an addendum to our review for Apex Factoring.





Update on Fleet Card Pioneer, WEX Inc.

Fleet Card Pioneer, WEX Incorporated

WEX Incorporated is a South Portland, Maine based provider of corporate payment solutions and fleet card services to commercial customers primarily in the transportation, health care and travel industries. Wex operates offices around the world in countries ranging from Brazil and New Zealand to Norway and the United Kingdom. In total, WEX Incorporated employs over 3000 associates worldwide.

WEX Borrowing Facilities

WEX is set to report earnings that will be released next week. Given the recent upwards move in global interest rates, now is an opportune time to check in on WEX, who relies on variable or floating rate borrowing for a significant amount of financing.

Much of this is tied to LIBOR or the London Interbank Offer Rate, which has been moving higher along with U.S. Treasury rates. Case in point, the 3-month LIBOR has risen to 1.81%, up from roughly 50 basis points just a few years prior. Concurrently, U.S. 10-year Treasury note rates have doubled in the past few years and now stand at 2.80%. While still historically low, it is a trend that market watchers are keeping an eye on.

But WEX appears to be actively monitoring the rate moves. On December 27, the company reported an interest rate swaps transaction ($500 million in 5-year swaps) at an average rate of 2.21% that WEX expects will reduce the impact of rising interest rates on existing variable debt.1

Further, the company was also able to renegotiate $500 million of its borrowing facility through Banc of America, N.A. Mitsubishi (MUFG Union Bank), SunTrust and Citizens.2 The result was a half a percentage point reduction in borrowing rates (in conjunction with another tranche B loan which is to be set at 2.25% for LIBOR borrowings).3

Its moves like these that we like to see in the face of rising interest rates. It demonstrates a proactive approach by management to minimize the effects of higher rates on their financing capacities. After all, it is these financial resources which allow the company to manage its corporate payment platforms, as well as price factoring rates for invoice factoring, invoice financing and other small business funding facilities. These services fall under WEX’s Fleet One Factoring division, which provides net working capital to many independent trucking companies nationwide. As such, WEX technically competes with trucking factoring companies such as Apex Factoring and OTR Capital.

WEX Inc.’s Fleet Card Roots

WEX began offering its fleet card payments to trucking customers way back in 1983. Today, customers representing over 11 million vehicles receive a number of benefits including payment solutions and security.

For example, the WEX Fleet SmartHub and WEX Connect Apps are perfect for customers on the road. These allow drivers to locate the cheapest fuel on their routes, providing additional savings for fleet card members. Right on WEX’s website, they have a section where small business owners can compare fleet card offerings against the WEX fleet card. We will keep readers, often business owners who depend on small business factoring services, updated on WEX’s financial condition following earnings announcements. Until then, refer to our Fleet one factoring company reviews for more information.




3 Ways to Improve Net Working Capital

 Boost Your Net Working Capital

(Read Time 1-2 minutes)

IMPORTANT! If your business plans on borrowing money in the near future, start monitoring your cash flow. Positive cash flow is the key to repaying debt and is what banks scrutinize when making lending decisions. Banks monitor this is by calculating one of their favorite liquidity metrics, net working capital.

What is Net Working Capital?

Calculating net working capital is pretty simple. It’s the difference between current assets and current liabilities on the balance sheet. It indicates how well a business can meet it’s short-term obligations.

Generally, items listed as ‘current’ assets can be converted into cash within a year. Such items such as cash or marketable securities, inventory, raw materials and accounts receivable such as outstanding invoices.

But many businesses calculate it incorrectly. Don’t forget to include  raw materials under current assets. For small businesses, this can be anything from sand and cement to silver and palladium.

Current liabilities are expected to be paid within one year. These include short term debt, payroll taxes payable and accrued liabilities. Monitoring net working capital is crucial since running out of cash contributes to 29% of failed startups.2

Keep in mind, net working capital is more important to creditors-equity investors are more interested in profitability ratios. Improving net working capital will go a long way in stabilizing your business finances.

Improving Net Working Capital

A lender may be more favorable with terms even if net working capital is slim- as long as trends are improving. So, business owners should focus on the change in net working capital. There are a number of ways to improve net working capital. Here are three of our favorites:

  1. Factoring Invoices

A simple way to improve cash flow is through invoice factoring. Instead of waiting 30 or 60 days for customer payment, businesses can sell invoices to a factoring company as soon as they’re billed. The transaction provides immediate funds that can be used for payroll, inventory or debt repayment.

Factoring invoices kills two birds with one stone: It immediately improves cash flow and net working capital. Down the road, it can improve your chances of obtaining a small business line of credit with better terms. But at that point, you may be working with a factoring company who has extended you a revolving facility of its own.

Of course, if your customer doesn’t pay, the factor may come after you for the invoice amount. One way around this is non recourse factoring, which transfers the default risk to the factor. While more expensive, it makes sense if you have outsized receivables that could harm your business if defaulted upon.

  1. Sale-Leasebacks

Today’s businesses are choosing to be ‘asset light’. The days of purchasing capital intensive items real estate, machinery and equipment are dwindling. Many prefer to lease, not buy. This trend can also improve working capital and cash flow.

If your business owns significant hard assets (buildings or vehicles), consider selling them and leasing right back from the new owner.  The transaction can also lock in cheap ‘cap rates’ (from historically low interest rates) and protects against asset depreciation. Additionally, a new operating lease can lower your business’ debt-to-equity ratio, potentially lowering future costs of capital.

In short, sale-leasebacks unlock the cash tied up in illiquid, longer-term assets.

  1. Refinance Outstanding Loans

Finally, see if you can refinance existing loans to longer maturities. This would increase net working capital by reducing the ‘current portion of long term debt’, a current liability.4 If selling a fixed asset isn’t an option, considering refinancing the note against it.

If your business has a loan  (even an SBA loan) you may be able to refinance it if the terms are deemed ‘unreasonable’.5 Examples of such terms may include seller-financed deals, revolving lines (an asset based lending transaction) or the lender is simply unwilling to renew.6

Keep in mind, many factors offer revolving lines of credit in addition to factoring services. Check out our invoice factoring company reviews page for more insight.








factoring accounts receivable

Factoring Accounts Receivable for Growth

Factoring Accounts Receivable: NOT Too Expensive

factoring accounts receivableOne of the perceived disadvantages of factoring accounts receivable is the cost. But a closer look at factoring expenses may shed a different light. While factoring fees might be higher than the interest rates on a traditional bank loan or line of credit, the two financing options are really quite different. Accounts receivable factoring involves the sale of outstanding invoices, at a discount, to a third-party factoring company for immediate funding.

With a bank loan, once the money is lent, the bank isn’t involved anymore (unless payments are being missed). With invoice factoring, the factoring company essentially becomes a partner with the business. The factor often takes over the collection duties and credit services for the business which has a number of benefits. And you’re essentially receiving these additional collection and credit services for free. Also, the credit quality of your customers could improve since this is the factor’s area of expertise, presumably not yours.

And with non recourse factoring, the credit risk of the business’ customer (also known as the account debtor) is transferred to the factoring company, which can reduce some of the expenses incurred for collection and allows you to focus on running your business. This is important if you had an outsized invoice that represents a major portion of annual revenues that would be very detrimental if not received.

Factoring Accounts Receivable Tip: Ignore APR

A common mistake we see when assessing the cost of factoring is simply taking the factoring fee and annualizing it. Doing so would produce an APR that rivals less desirable small business funding options such as a business cash advance. This is not the best way to assess the true factoring costs.

Unlike a traditional loan or a business line of credit where money is simply lent, factoring costs reflect not just the actual funding but a variety of other services. There are the initial set up costs, filing documents with multiple agencies, collection services, the due diligence required on assessing each invoice (credit analysis on the account debtor), checking for outstanding liens, confirming with the customer that the work was actually fully completed (works in progress are generally not allowed by most invoice factoring companies). And of course, the fact that you are actually selling assets, often hundreds of thousands of dollars worth, on an annual basis.

Factoring Accounts Receivables Boosts Profitability

Your business can actually become more profitable by factoring receivables. Your gross margin increases by 1- boosting sales and 2-lower labor costs due to reduced man power involved in collections so bottom line may be improved by this type of asset based lending. So, factoring can improve sales and profitability on the income statement whereas traditional loan will put debt onto your balance sheet, lower your credit rating and hinder future financing prospects.

Comparing Fees Between Factoring Companies

It is often difficult to compare the costs of factoring between multiple invoice factoring companies. Even though they may advertise a cut and dry rate, there are a host of ancillary fees that must be accounted for. Further, the quotes a prospective business may receive could be like comparing apples to oranges if they aren’t based on the same standard 30-day rate.

For example, if you are getting multiple quotes from factors, which we highly recommend, you could get quotes based on 15, 30 or 45 days. This is similar to when shopping for a mortgage, you may get those companies that quote you in points, and all other variations except what you actually want, a plain vanilla 30 year fixed quote. Ask your factoring company to provide you with a standard 30-day rate. After all, invoice financing shouldn’t be a guessing game with hidden costs.

Also, the advance rates are often the most attractive metric for many businesses since that immediate funding what’s often so coveted. Sometimes, a factoring company will offer a large advance to attract a new customer interested in factoring accounts receivable. But can you be sure that your cost of funding is competitive outside of the advance? Here is an example of a hypothetical group of quotes from factoring companies:

Advance Amount Factoring Fee Cost per Dollar
Factoring Company #1 70% 2.25% .03214
Factoring Company #2 80% 2.5% .03125
Factoring Company #3 85% 2.75% .03235
Factoring Company #4 90% 3% .03333
Factoring Company #5 95% 3.5% .03684


As you can see by the green highlight, the lowest cost of funding, on a per dollar basis, is factoring company #2. The most expensive cost of funding is with factoring company #5.  You can calculate this yourself by dividing the factoring fee by the advance rate to get the cost per dollar.

Of course, if it’s more important to your business to get the largest advance possible, then consider company #5 with the largest advance. Advance rates are predominantly determined by the creditworthiness of the account debtors while the factoring rates are more influenced by the factor’s cost of funding. During the financial crisis, factoring rates jumped, even as general interest rates dropped, a sign of credit demand dropping.1








accounts receivable factoring

Accounts Receivable Factoring Tip: Raise Your Prices

Accounts Receivable Factoring Tip: Raise Prices

accounts receivable factoringMany business owners are considering accounts receivable factoring to improve their business’ finances. This type of funding can bring vital cash to a business that’s waiting for payment from credit sales-cash that can be used to run the business more efficiently in a variety of ways.

But the business must get approved by a factoring company first. This isn’t always easy. A common reason for small business funding rejection is low gross profit margins.

Invoice Factoring Companies like Profitable Businesses

Contrary to conventional factoring wisdom, invoice factoring companies want to do business with fast-growing, profitable businesses-not extend a lifeline for troubled businesses. The business that wants to start factoring accounts receivable doesn’t necessarily need to be bottom-line profitable yet, but if gross margins are healthy (above twenty percent), it signals the potential for a long invoice financing relationship because the business should survive.

A business with a strong gross profit margin will not only be more profitable, but they will weather a financial setback or mistake much better. Consider a business with gross margins of 20%. Just a $1 increase in fixed costs forces the business to increase sales by $5 to break even.

Some accounts receivable factoring companies won’t approve a business without at least 15% gross margins but the higher the better for gross margins.

As a refresher, gross profit margin is calculated as:

Sales – Cost of Goods Sold = Gross Profit

Gross Profit/Sales= Gross Profit Margin

Accounts Receivable Factoring Tip: Raise Your Prices

Raising prices is the easiest and most obvious way to improve your gross profit margins, assuming you keep your cost of goods the same. Your business should become more profitable and improve your access to small business funding. For late-paying customers, all you’re doing is building the necessary factoring costs into the price.

Consider adding 2% to the cost of your product. Don’t worry too much that you’ll scare off your customer. Here’s why. The longer payment terms are likely more important to them than the actual price.

If you’re still worried this will scare off a customer, consider an early incentive. For a customer that typically pays you in 90 days offer them new payment terms. Inform them of the 2% increase, but offer a discount for earlier payment, 1% for each 30 days earlier the pay. This way, they have the power to decide whether they want the price increase or not.

Your customer realizes they are already receiving an interest free loan from you. They may be enjoying supplier discounts on their end. Further, they have increased their net working capital to more effectively run their business, at the detriment to yours.

Remember, the cash flow is likely more important to your customers than a small increase, which helps defer your fees when invoice factoring. This is essentially true the larger and more established your customers are. Not that they need it. The costs of borrowing in corporate debt, especially after the interest deduction, makes their cost of capital almost free.

Further, an increasing number of companies have made delaying their accounts payable a competitive business strategy. Some like Amazon went as far as to operate with a negative cash conversion cycle of 24 days back in 2014.1 This is essentially free funding.

Accounts Receivable Factoring

Improving your gross profit margin with a price increase will go a long way towards getting approved by invoice factoring companies. Lack of profitability is one of the most common reasons businesses get rejected for accounts receivable factoring. Once your gross margins improve, see how your profitability continues increasing once you start factoring receivables.

The digital age has the potential to really bring down factoring fees for small businesses. Online factoring companies such as Bluevine and Fundbox are revolutionizing the way businesses access capital. Check our Fundbox reviews and Bluevine reviews for more information on their costs, minimums and reputation. There are also online marketplaces where businesses and consumers (in the case of freelancers) can shop the best financing terms. This allows them some additional protection against large, late-paying customers.






factoring receivables

Factoring Receivables? 3 Tips for Approval

Factoring Receivables? 3 Things to Check

factoring receivablesSo you’ve decided you want to start factoring receivables. That’s great. Invoice factoring provides a number of pros for your business. Factoring can support fast growth, provide a cash flow infusion during a rough patch and free up resources (time and money) for your business. It can even improve your bottom line.

But when you have selected a factoring company you’d like to work with take some time and consider these three issues that are sure to come up during the application process.

Be prepared for these three questions from invoice factoring companies:

  1. Are your Receivables Free and Clear?
  2. Do you Owe Back Taxes?
  3. What are your Profit Margins?

Factoring Receivables: Are They Free and Clear?

When factoring receivables, you will undoubtedly be asked about your receivables-specifically if they are free and clear. Factoring companies want to make sure they are able to collect from the account debtors invoices. Factors will make sure the business isn’t already using another factoring company and no one else has any legal claim on these same assets that the factor is using as collateral. A UCC 1 (Uniform Code) will be filed that will determine if there are any liens on these receivables.

Inform the Factoring Company if you Owe Back Taxes

The next thing a factoring company will ask is if you owe the IRS (Internal Revenue Service) any back taxes. Factors need to know this because the IRS’s claim on any business asset is senior to any other claims. In other words, factoring companies don’t want to get into a battle with the IRS over a claim on someone’s assets. The factor will lose and they know it.

While owing back taxes is a setback for a prospective business customer, it doesn’t have to be a deal breaker. If the business client can show the factor that there is a payment schedule in place with the IRS there may still be able to start factoring receivables. But be up front with the prospective factoring company about any back taxes owed.

What are your Profit Margins?

Many businesses that inquire about factoring receivables don’t maintain strict financial records. That’s fine, but a factoring company will ask about the profit margins? Why? Think about it from the factors perspective, they want to be factoring receivables for a business that has the ability to grow. If the company is relatively new and already has low profit margins, it’s not a great indicator of a viable business. A factoring company wants to see profit margins of at least 10%, hopefully 15%. Accounts receivable factoring is a viable small business funding option your business and keep your operations on the right growth trajectory.

Hopefully, these tips were helpful in getting approved by a factoring company. The key is to find the best factoring company for your business. That could be based on location, industry or simple your comfort level with them and their cost structure. We provide reviews on several factoring companies and aim to help small businesses decide whether invoice financing is right for their business. Often times, businesses turn to factoring when the banks turn them down due to a lack of operating history, financial statements or profitability. Don’t worry, this is a common issue with fast growing companies. Factoring frees up resources that your company can use to further growth, not act like a debt collector. Plus, the immediate funding allows businesses to capitalize on supplier discounts or strategic opportunities.

bond bubble

The Bond Bubble and Invoice Factoring

The Bond Bubble and Invoice Factoring

bond bubbleRegardless of how you define deflation, its prospect is a major threat to small business funding. It’s defined in different ways depending on what you read. The most common definition is falling prices. With this in mind, falling prices more the result of what we view as the deflation. The definition we like is “a contraction in the supply of money and credit in the economy”. With easy credit, the bond bubble has expanded to create trillions in global debt.

Perhaps you are wondering what this has to do with invoice factoring? Here’s how.

When the supply of credit shrinks, its called a credit crunch. As you remember, we experienced that during the financial crisis. The result- banks stop lending. The only lending that will remain is secured, asset based lending.

The Bond Bubble Threatens Small Business Funding

Small businesses should fare the worst if the deflation is as scary as some predict. This is because During the financial crisis, we saw bank lending to small businesses dry up in many states. In fact, Fox News revealed that the U.S. lost 200,000 due to a lack of small businesses funding as measured by the Census Bureau.1 Up to 82% of small businesses failures stemmed from a lack of funding.

So a viable option for many businesses is invoice or accounts receivable factoring. In case you’re wondering what is factoring, here’s a quick refresher

‘The prospect of deflation is a major threat to small business funding.’

Invoice Factoring is not a Loan

Since your business sells unpaid invoice to a factoring company, you sidestep the need for lending. Remember, invoice factoring improves net working capital while incurring no new debt, while invoice financing is subject to the availability of credit.

Our advice would be to establish a business relationship with an invoice factoring company sooner rather than later. Look for a company that will let you factor a single invoice, known as spot factoring. This way, even if you hadn’t planned on factoring receivables, you will officially be a customer of theirs. This is important because when the bond bubble pops and deflation begins in earnest, every small business in America could be looking for a factoring company.

‘When deflation kicks in and credit does dry up, every small business in America may be looking for a factoring company’

Here’s another tip when selecting the best invoice factoring companies for your situation, make sure they offer non-recourse factoring (not all do). Factoring companies could very easily stop offering the non recourse factoring option to new customers and make all the transactions done on a full recourse basis. You could have a better chance to remain operating under a  non-recourse method (basically being ‘grandfathered’ in). Check our factoring company reviews to locate a factor in your area. Like with a business line of credit, the time to apply for small business funding is before you need to.

Some factors with deeper pockets (either backed by venture capital like Fundbox) or affiliated with a bank (such as Florida’s Amerifactors or Michigan based  Crestmark) should weather an economic downturn better than most.