How our Receivables Purchase Line of Credit works
The Flexibility of Receivables Finance, the Clarity of a Line of Credit
The Republic management team has many decades of experience in commercial finance and we understand that for many businesses used to or aspiring to a line of credit product find themselves in between a traditional factoring approach and the line of credit. In designing the innovative Receivables Purchase Line of Credit we have successfully put together the benefits of both;
Benefits of a Receivables Purchase Line of Credit
- No covenants – Line of credits are laden with covenants – whether on your earnings, leverage, minimum capital or cash-flow, at Republic we have no covenants. We focus on your businesses collateral.
- No restrictions on distributions – You choose how much of your businesses earnings to distribute – it’s your call not ours.
- Focused on business collateral – Our focus on is the collateral we are advancing against, primarily your accounts receivable. We do not look to collateralize personal assets, we are a commercial financier for entrepreneurs.
- No hidden fees. – Line fees, monitoring fees, quarterly audits, lockbox fees etc. they just keep on coming with many funders. Ask for our fees list, and compare with others, you will see a lot of white space on ours.
- Immediate cash reserve release – Many factors will hold cash reserves for a weekly release. This is the balance on any A/R collections. We apply collections on clearance directly to the sum advanced to you making it available there and then, available daily.
- Clear pricing – A flat fee on the receivables and an annualized prime plus based fee on the sums advanced to you. Simple and easy to understand.
- Easy to understand reporting – With your availability (the sum you have available to be drawn down) calculated on a borrowing base method it is easy to understand your position. Coupled with on-line reporting access our reporting works for you.
How our Receivables Purchase Line of Credit Works
- The client submits a schedule of the invoices listing their accounts receivables to be funded along with the invoices and supporting documentation. This is done at the same time as the Client sends the invoice to their Customer on completion/delivery of the work.
- Republic reviews the documentation, spot confirm the receivables and add the receivables to the pool of eligible receivables.
- The client can draw up to the product of the eligible receivables and the advance rate (typically 80-85%). When the receivable is paid by the Customer to Republic’s lockbox the balance of the face value of the invoice is released to availability immediately.
Uses for the Receivables Purchase Line of Credit
- Support growth.
- Take advantage of business opportunities.
- Keep current with tax and payroll obligation.
- Meet peak seasonal demands.
- Take advantage of purchase settlement discounts.
- No need for you to offer settlement discounts on your receivables.
- Be able to get standard credit terms from vendors and focus on negotiating better rates.
- Hire new employees.
- Release the cash-flow from your accounts receivables.
- Buy out partners.
- Support an acquisition of a competitor.
- Start a new line of business.
- Fund research and development.