[Brian Work]

Hi Mark,

I am on the banking side with Wells Fargo. We have factoring programs that we work with to support client sales outside of the US such as Mexico. It does require larger volumes to make it worthwhile for setting up a customer in a factoring program which if the volume is not there maybe credit insurance may be a first option. One of the main positives of factoring from the suite of banking products is that it remains as a form of open account vs. other products such as standby’s or commercial LC’s (process can be tedious and delays can occur). Another positive is that the programs may be able to be structured as off balance with a true sale opinion which may provide more of a benefit for publicly traded companies. The factoring programs may be non-recourse meaning that the bank is taking the full credit risk of buyer (your client). The programs do improve cash flow since you are able to sell the account receivables and receive cash to improve liquidity. Some of the cons are that it may be more expensive than other forms of traditional financing which reduces profit margins. Happy to answer any other questions. Thank you!

Brian