The Community Bankers Association of Ohio (CBAO) is hosting a special webcast on at 10:00 AM Wednesday, February, 6th , to discuss the current state of community banking and address the potential opportunities and solutions available for banks in a post TAG environment. Special guest, StoneCastle Partners, one of the largest investors in community banks, will provide an update on the current state of banking with an outlook on key issues facing community bankers in 2013.
Watch your CBAO newsletter or contact Kyle Moseman for additional information.
Published by the Community Bankers Association of Ohio (CBAO), The Community Banker Bulletin provides current news about commercial and business loans and lending, bank regulation, mortgage lending, deposit services, credit lines, regulatory issues, insurance, and other issues affecting community banking.
Tuesday, January 15, 2013
Mark your Calendar: TAG Alternative Strategies : Exclusive Event for Ohio Community Banks Wed Feb. 6, 10 AM
Monday, January 7, 2013
Factoring: What is it and how can it help banks and their customers?
Factoring the
sale of invoices is one of the oldest forms of “lending”, dating back until at
least the time of the Romans. It’s also one of the simplest and straight
forward ways of converting assets to cash, yet it is often misunderstood.
Terms
like “hold back,” “reserves,” “advance rate,” and “points” can put people on
edge. Add to the fact that just about everyone tries to compare “factoring vs.
bank loans” and it is no wonder many people leave the table confused. We all like
to begin discussions about financing with terms, but discussing factoring costs
in the same way we discuss loan terms is not the best way to help a customer
understand factoring.
Because
the invoices are the source of repayment to the factor, they are evaluated more
carefully that the client’s financials. Many companies that would not be able
to obtain a loan can factor to raise cash, and do so quickly! Factoring could
also be used in a “work-out” situation for an existing customer.
Why
over-complicate the issue? If as banker we are asked to help a customer get
cash, let examine the possibilities and let the customer decide what will work
for them. Sale
of invoices, which is all that factoring is, might be just the solution. It is
routine in some industries: transportation, temp agencies, construction
contracting, and others where there is a typical long lead time between
incurring expense and receiving payment.
Other
variables come in to play – especially when it comes to due diligence, but the
factor will handle that. CBAO has identified numerous sources for factoring,
some of which specialize in certain industries. If you have a customer who
might benefit, let’s begin a discussion!
Labels:
CBAO,
community banks,
converting assets to cash,
factoring vs. bank loans,
lending,
sale of assets
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