How it works |

What is Factoring

EHB specializes in factoring, a fundamental form of asset-based lending that combines elements of secured lending and short-term business loans. In short, factoring advances funds against an invoice. The source of repayment of these loans is the dedicated cash flows from the conversion of working assets (i.e. the payment of invoices), unlike most commercial loans where the source repayment is cash flow from operations.

EHB Capital offers both non-recourse and recourse factoring. When applying non-recourse factoring EHB Capital collects solely from the account debtor of the invoice (e.g. the Buyer). Recourse factoring keeps the primary repayment risk with the account debtor However in the event that the account debtor does not pay, the factor may collect from its secondary payor, the Seller. 

How factoring works

The following chart describes the simple 4-Step process of factoring as executed by EHB Capital:

 

Step 1

Company A (Seller) delivers the product to Company B (Buyer) and agrees to 30-day repayment timeframe.

Step 2

EHB Capital negotiates the purchase of Company A’s invoice by compiling all required documentation, submitting the invoice for insurance, and advancing 80% of invoice value.

Step 3

After 30 days Company B executes payment for 100% of invoice value directly to EHB.

Step 4

Upon receiving 100% payment for invoice, EHB transfers the withheld 20% of invoice value net of service fee to Company A.