General Contractor

West Sacramento, CA

I’ve been with Melissa and LDI since 2010 and they have been nothing but the best partners you can ask for. Working in construction, capital is king. There have been many times when LDI got me thru some tough situations and came through in the 11th hour to ensure I could continue to grow my business. LDI gets 5 stars from me!!

Who benefits from factoring?
Most businesses can benefit from factoring.  The business (client) is able to turn an asset into instant cash, thereby creating much needed cash flow to operate the business.  Increased cash flow can help a growing business to do things like:

• Take advantage of vendor discounts
• Buy equipment
• Meet payroll or other working capital needs
• Reduce stress

What are other advantages of factoring?
Factoring is “off balance sheet financing”.  In other words, factoring does not create debt for the business.  When an invoice is sold, it immediately converts from a non-cash asset to a cash asset on the business balance sheet.  There is no bank line or credit line reported to any credit agency.  The factoring relationship does not affect credit scores or debt-to-income ratios.

In addition, LDI Growth Partners acts as extension of your AR department.  We provide credit reviews of all customers and we process the accounting for the customers that we factor for you.  In addition, we can review credit for customers that our clients are considering doing business with so that our clients can make an informed decision.

Who should factor?
This is a common question and the most difficult to answer.  The general public conception is that factoring is only for new, growing and struggling businesses that are not otherwise “bankable”.  This is certainly true.  At LDI Growth Partners, we strive to help these businesses grow to the point that they are “bankable” and eligible for other forms of more conventional financing.  However, there are many businesses who find that the ease and convenience of factoring make it a desirable form of cash-flow management on an ongoing and permanent basis.

Is factoring like using a credit card?
No. This is a common comparison and it is like comparing apples and oranges. When you use a credit card, you are creating debt that requires a monthly payment and an interest charge on the unpaid balance.  With factoring, you are selling something that you own at a slight discount.  Example:  You look out in your driveway and you see your old car that you put a “For Sale” sign in and you have no takers.  Since you need the car moved out of your driveway AND you need some cash, you agree to sell it for a couple of dollars less than your “For Sale” sign and Kelly Blue Book say it is worth.  As soon as you sign over the pink-slip and accept the reduced payment, you no longer own the car.  The person who purchases the car from you is now responsible to make sure it is registered and insured.  When you sell your invoice to LDI Growth Partners, we take on the task of making sure it is paid on time.

Are Factors really just collection agencies?
Absolutely not.  At LDI Growth Partners, we are not in the business of collecting past due debt. We are in the business of helping businesses meet their cash-flow needs. Part of the service we offer is to work with your customers so that late payments are reduced. We have found that often times our involvement with a client and their customers reduces the average pay time on invoice significantly.

Do factors charge interest?
No.  Factors purchase invoices at a discount.  That discounted amount is determined by the length of time the invoice is outstanding.

Do factors loan money?
No.  The relationship between a factor and their client is that of buyer and seller, not one of lender and borrower.  There is no annual interest rate and no monthly minimum payment.  Each invoice that is purchased is its own transaction.

Do factors set credit limits?
Some do and some don’t.  At LDI Growth Partners, we do set parameters for each client, based on their cash needs and monthly revenue.  These parameters are meant to be benchmarks so that we can work together to best fit the cash flow needs of your growing business.

“If I throw a rock, I will hit a factor, is that a bad thing…”
It is a GREAT thing!  If you are looking for a factor, it can seem daunting that there are so many to choose from.  Each company has its own flavor and personality.  It is much like picking a hairdresser, barber or insurance agent.  You might have to interview several to find the one that fits your needs and expectations.

How do I choose a factor for my company?
Make a list and ask yourself what your needs and expectations are; what is important to you.  Some starter questions to consider:

Is location important?  
Technology being what it is today, most transactions can be completed over the internet or telephone.  Is it important to you that your factor can meet you for a cup of coffee to discuss an issue or problem?

How involved do I want my factor to be in my business?
Do I want a silent partner who simply wires money into my bank account, or do I want a financing partner and resource who understands the pitfalls of growing my business – someone I can turn to when the chips are down or to share a success?

How is my business growing?
Are you a start-up or an established company in a rapid growth phase?  Are you planning your growth carefully or have you just been presented with the opportunity of a lifetime that you are scrambling to get your ducks in a row so you can take advantage of that opportunity?

What am I willing/able to spend for this service?
If price alone is your driving concern, ask yourself some additional questions:
• What are my true net profit margins?
• Can I build the price of factoring into my invoice?

How long do I anticipate needing to factor my invoices?
Are you looking for help on a single transaction, contract or customer?  Is your company work seasonal?  Is factoring a long-term cash management tool, or a short-term jump-start?

How does money flow into and out of your business?
Will factoring my invoices help to position my company for true growth or am I simply looking to increase my bank balance to survive?

When shopping for a factor, what should I ask/what do I need to know?
You definitely want to know how the factor views client relationships.  You should ask about contract requirements.  Are there minimum factoring requirements?  Are there requirements for certain term limits (often 12-24 month contract terms).  What is the factor’s ideal client relationship? How flexible is the underwriting/review process?  Does the factor have experience in your industry or a similar industry? Who makes the funding decisions?  Are you talking to a decision-maker?


Antioch, CA

Melissa & the LDI team were instrumental in keeping my business thriving! Without their support & knowledge I 100% can say I would be out of business. Thank you LDI for bridging the gap!