Factoring Accounts Receivables

1. Factoring Accounts Receivables By: Veronica Wallace Vice President

2. Money was easy … so it seemedEconomic conditions changed and investors and bankers became less risk tolerant. Credit has become tighter and tighter and tighter

3. Spot Factoring: One time, UCC carve out, fast, extra docs Full Service Factoring: Ongoing, full A/R management, minimum commitments, intercreditor arrangements possible A/R Financing: lower cost, daily ledger, prime + on funds borrowed, much like LOC based on aging report, less expensive, includes inventory and other assets PO Financing Solutions:LC’s and Vendor Assurance So …What is Alternative Financing? When traditional bank financing is unavailable, small businesses need alternative business financing sources to start or stay in business! Asset Based Lending:

4. What is Factoring? Is it a new financing Option? Factoring has been used for centuries. It is one of the oldest forms of financing. Until recently, factoring was primarily used in the garment and textile industries. Today, factoring is a $150 billion/year financial product and is widely used by all types of businesses that extend credit to credit worthy commercial customers.

5. How does Factoring work? Bridgeport Capital purchases your accounts receivable converting them into working capital. So instead of you waiting on your customers to pay the invoices, factoring allows you in a timely and efficient manner to convert your accounts receivable into cash, the FUEL that grows your business.

6. How long does it take to start? Within 24 hours of receiving the basic company information, we will issue a proposal. If it is accepted by the client, we then conduct our due diligence and complete all documentation. Initial funding typically takes place within several days, after that, funding generally occurs within 24 hours of their invoice submissions.

7. The Factoring Process • Invoices purchased in two installments, advance and reserve: • Advance --- up to 90% of the funds are delivered within 24 hours of invoice verification • Reserve --- the customer has paid and the balance goes to our client less the discount fee.

8. Factoring Example • Invoice • $1, 000.00 • Advance • - 800.00 • Invoice paid 21 days, reserve balance • 200.00 • Fee (30 days x 2.00%) • -20.00 • Net reserve paid to client • $180.00 • Total paid for invoice • $980.00 • Total discount on sales • $20.00

9. The Upside of a Factoring Transaction NO debt on client’s books NO loss of equity or control NO balance sheet entry Unlimited availability of funds Accounts receivable encumbered only, not personal or business assets.

10. The Upside of a Factoring Transaction NO required periodic payoff NO high interest rates NO high or numerous administrative costs NO restricted use of funds Detailed management reports

11. Factoring vs. Loans Traditional Lending • Strong credit required • Multiple/varied collateral • Personal guarantee • Cap • Strong restrictions • Lengthy underwriting • May require zero out Factoring • Strong/multiple debtors • A/R only collateral • Personal guarantee • Unlimited availability • No fund-use restrictions • Account open in 5 days • Factoring and wire fee • No payoff required

12. How Factoring Strengthens Financials Before Factoring • Accounts receivable $1,000,000 • Cash $200,000 After factoring • Accounts receivable • $200,000 • Cash • $1,000,000

13. Who Needs Alternative Financing? • Pre-Bankable companies: Start ups, inadequate track record, too small • Non-Bankable: tax problems, liens, bankruptcy, weak personal credit • Turnaround: Losses, negative net worth • Rapid Growth companies: in need of funds quickly, not enough supplier credit, temporary needs, great potential

14. Myth #1: “It Costs Too Much!” It may be expensive but “compared to what?” • Factoring fees are much like Merchant Fees with a 1.5% to 3% discount • One time discount, daily rate, up front and clearly shown • No credit checking, collections, posting and other A/R functions • Timing is everything. Lost opportunity can be very expensive. • It’s much less expensive than equity financing • It’s temporary solution and there should be an exit plan to a bank • Some are able to offset the fees by taking supplier discounts

15. Myth # 2: “I will lose customers” • Much more common now and understood • You can be selective with customers • Different levels of Notification are available • Professional business practices always followed • Customers like accuracy and professionalism • A history of successful conversions

16. Who are our clients? • Lightweight Garden Pot Wholesaler • Health Food Distribution • Flexible Meat Packaging Wholesaler • Uniform Shoe Distributor • Commercial Power Washing • Retail Display Staging • Flagging Company • Trailer Repair • Digital Training Programs • Auto Body Repair • Wholesale Office Furniture • Industrial Label Manufacturer • School Calendar Software Manufacturer • Mechanical Services for Buildings • Dried Fruit Manufacturer • Mfg and Distribute Hispanic Food • Import Export Exotic Wood • Perfume Manufacturer and Distributor • Distributor of Italian Food Sauces • Stainless Steel Water Bottle Wholesaler • Graphic Arts Producer • Ladies Hand Bag Wholesaler • Dry Cleaning Uniforms • Live Stock Water Recycling • Aftermarket Auto Lowering Kits • Fabricator • Landscaping • Wiring Systems Assembly

17. Who Is NOT Our Client? Bridgeport Capital does not do these ourselves but we can place them or introduce them to someone who might: Retail: merchant fee advance, equipment leasing Medical insurance claims, Legal Fees, Dental Claims Construction: progress draws, retentions, disputes over change orders or % completed: requires special handling and sub contractor monitoring Real Estate: introductions can be made if requested

18. B2B with clear open account terms like net 30 or 60 Must be able to provide a basic package (financials, agings, tax info, personal info) Strength of Receivables Ability to obtain first position on A/R Clear and up front about taxes (Form 8812) Qualifying them

19. Who is Bridgeport Capital? Bridgeport Capital Services is an established invoice factoring company providing their clients customized financial solutions and unparalleled service to meet their client’s business goals whether for short term needs, long term growth or to smooth seasonal business cash flow.

20. Veronica Wallace Phone: (469)-777-0921 E-mail: veronica@bridgeportcapital.com Website: www.bridgeportcapital.com

21. Questions?