Invoice Factoring at Tab Bank
(Read Time: 2-3 Minutes)
Tab Bank Quick Information:
- Tab Bank Headquarters: Ogden, UT
- FDIC Insured: Yes
- In Business Since: 1997
- Direct Lender: Yes
- Non Recourse Factoring: No
About Tab Bank
Transportation Alliance Bank, or ‘TAB bank’, offers a variety of funding options for both consumer and business customers. On the consumer side, they offer basic banking services including a number of competitive CD rates.
Tab Bank provides funding for businesses of all sizes, nationwide. As the name implies, TAB bank began as an invoice factoring company for truckers but has branched out with different services for many different industries. You may not have ever heard of Tab Bank, but if you are a business experiencing cash flow troubles, you should get to know them.
Despite only one official ‘branch’ in Ogden, Utah, the brand is relatively well-known in the West, with employees working in other states, including Arizona and California. For business customers, TAB Bank offers business banking and Treasury/cash management services. But their specialty is creative, small business funding solutions.
Many businesses are asset rich but cash flow poor. This is not what traditional banks want to see when evaluating a potential loan but there are a number of alternative lenders who will provide funding based off the level of the business’ assets. Tab Bank can be very creative with their asset based lending programs.
Tab Bank Funding Options
- Asset Based Lending
- Revolving Inventory Loans
- Lines of Credit
- SBA loans
- Accounts Receivable Financing
- Invoice Factoring (Recourse)
Invoice Factoring at Tab Bank
Tab Bank offers merchant customers immediate funding for overdue (eligible) business-to-business (B2B) invoices. This is done through invoice factoring, which occurs when a third party buyer (factor) agrees to buy a company’s outstanding invoices at a discount. TAB Bank operates primarily as an online factoring services.
Tab Bank has engaged in a number credit transactions for business customers in different businesses. In early 2017, a waterworks distribution company in California was in need of funding and the factor stepped in with a $4.5 million revolving facility. It would have been very difficult for a company like this to get a traditional bank loan. They also fund smaller deals, a recent example being $500,000 for a small trucking company.
Distributors, truckers and staffing companies are among industries often pursuing invoice factoring for cash flow because of delayed payments. Truckers don’t get paid until after they deliver their payloads. In the meantime, there are expenses that are born by the trucking company (fuel, driver salary, maintenance, etc.). A solid cost savings program including fuel cards, quality load boards, fleet card and GPS can help keep truckers rolling while awaiting payments.
Tab Bank Recourse Factoring
Tab Bank offers recourse factoring of eligible, unpaid invoices. With recourse factoring, the factor will buy your invoices at a discount but you must pay back the factor whether your clients ever paid the invoices or not. This means your business still retains the credit risk of the outstanding invoices.
While you haven’t been able to shed the credit risk, your cash flow has been solved and the factoring fees you’ll pay are lower than with non recourse factoring. This added savings can be used to make payroll, repay debt, buy inventory or take advantage of a strategic business opportunity.
Since factoring is an asset sale, not a loan, your company doesn’t incur additional debt. At some point, you may be presented with other asset based lending options such as accounts receivable financing. You may also qualify for a revolving inventory loan based on a percentage of the inventory’s market value. Further still, some ABL options may accompany a factoring program.
TAB Bank Invoice Factoring Info:
- IFA Member: Yes
- Funding Advance: Up to 90% of eligible invoices
- Funding Time: Under 24 hours
- Dedicated Rep: Yes
- Factoring Support Services: Recourse factoring
TAB Bank Invoice Factoring Company Review
Tab Bank has Plenty of Business Capital
There appear to be ample financial resources and net working capital at Tab Bank, which should allow them extend credit and funding for nearly any situation or sized deal. At the end of 2016, they had amassed over half a billion in deposits.1
Tab Bank has a Good Reputation Overall
We looked into what former customers were saying about their dealings with Tab Bank. There were a few unhappy customers, but they were relatively few in number and involved billing issues and sometimes broker referrals. The bank is rated A+ by the Better Business Bureau, but is not accredited.
As for the banking side, they received a B+ in financial health from the site deposit accounts.* They cited a low Texas ratio, 14%, which infers the bank has ample reserves to cover non-performing loan losses.2
A Wide Variety of Options
Another thing we like about TAB bank is that they offer a wide variety of small business funding options. For businesses that desire funding without incurring additional debt, TAB offers invoice factoring to improve cash flow by selling off assets (the invoices/accounts receivable). They also offer accounts receivable financing, asset based lending, equipment financing and SBA loans.
The variety extends to the industries they serve. Despite beginning as a bank for trucking companies, Tab Bank now offers funding across many different industries including distribution, retail, staffing, manufacturing and, of course, transportation.
A Couple Things to Consider with Tab Bank
Still, Tab may not be the best fit for certain businesses. For one, their contract lengths on invoice factoring and ABL are typically quite long, around two years in length. We always prefer the shortest contracts possible.
But, for the right company (probably more established) that fully understands the factoring agreement and all associated fees, longer contracts may bring cost savings. It’s never a bad idea to review a factoring agreement with an attorney or financial professional before you commit to anything.
Another issue we must bring up is the lack of non recourse factoring at TAB Bank, which we feel is very important for smaller businesses with outsized invoices. In some cases, non-payment by a key account debtor can grind operations to a halt.
Even when the factoring fees are higher, having the option to offload some credit risk can be very comforting businesses, allowing them to focus on strategy, not collections.
Should I be Factoring Receivables with Tab Bank?
Given the variety of funding options, relatively low complaints and a twenty-year operating history, we would feel comfortable factoring receivables with Tab Bank. If you are comfortable with your client’s ability to pay their outstanding invoices, then you might consider their recourse factoring program.
If invoice factoring seems like a funding solution for your business, consider getting a free quote and see how much funding you qualify for.
Other Invoice Factoring Companies like TAB Bank:
- Fleet One Factoring
- Green Bank
- Crestmark Bank
- National Bank of Arizona
- Riviera Finance
- Independent Bank
- Apex Factoring
- OTR Capital