Through researching alternative bank financing they discovered the practice of factoring.  Factoring is a form of asset-based financing and is the process of selling commercial accounts receivables by a business in order to obtain immediate cash payment of the accounts before their actual due date.

Factoring differs from borrowing in that the accounts receivables are actually sold rather than merely offered as collateral. The net result is that your company can convert its receivables into immediate operating cash so that you will not have to wait 30, 60, 90 days or more for your customers to pay.

Purchase order financing is a funding option for businesses that need cash to fill single or multiple customer orders. In many businesses cash flow problems exist. There will be times where there is simply not enough money available to cover the costs of doing business. As a result, there may be an order from a client that isn’t able to be fulfilled due to a lack of cash. A company may not be able to afford the supplies necessary to meet the client’s particular needs.

The company had a lot of hoops to jump through with the United Nations as payer.  The factoring company they choose were able to help them navigate through these challenges.

Usually, once factoring is complete, the factoring company sends domestic corporations a notice of assignment, a binder of payment that gives them legal recourse should the debtor not pay. However, the U.N. is not bound by U.S. law.   The factor researched the U.N.’s documented assignment guidelines and found the right person to negotiate with, as well as the U.N.’s procurement officer in Haiti, their payment office in Denmark, and the equipment supplier in Columbia – a virtual U.N. of contacts. The U.N. also only pays by wire, and only to the name of the company on the contract.  The factor negotiated with the bank to accept a wire in the company’s name.