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| Frequently Asked
Questions Regarding Business Financing from
Ashford |
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What
is Purchase Order Financing?
As an example, client XYZ gets orders from End-Buyers
(i.e. retailers, boutiques, etc) in the amount of
$200,000. Client XYZ must pay $100,000 to purchase the
goods. In this case, Ashford would issue a Letter of
Credit or pay the supplier for the total cost of the
goods $100,000. |
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What
is the difference between a Factor and Ashford Finance?
Factors only advance funds against invoices after the
importer has purchased the goods. Ashford not only
finances the receivable but also purchases the goods
from your supplier. If you are already factored, we will
work with your factor so that we purchase the goods and
the factor advances you on the accounts receivable. |
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What is the difference between a Bank
and Ashford Finance?
Banks lend money based on the borrower’s balance
sheet and equity. Ashford will finance a
transaction based on its merit alone. What if my
supplier does not require a Letter of Credit but
prefers payment on collection basis. We can use
our facilities to wire funds to the supplier. |
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What if my supplier does not require a
Letter of Credit but prefers payment on
collection basis?
We can use our facilities to wire funds to the
supplier. |
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What are the advantages of using a
Letter of Credit?
A Letter of Credit protects all of the parties
in the transaction. It protects the importer /
exporter by guaranteeing that the goods are made
to the specified standards and shipped on time.
At the same time, the L/C benefits the supplier
by ensuring payment will be made upon the
successful completion of the order. |
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Does Ashford Finance provide any other
benefits to the borrower?
With an extensive background in all aspects of
trade finance, Ashford provides logistical
management as a part of every transaction.
Issues such as credit-checking, invoicing,
tracking and collection come standard in
addition to 100% financing. |
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What if I have many small Purchase
Orders?
We are able to group many small orders under one
Letter of Credit as long as the goods are
produced by the same supplier. This is a common
scenario for many of our clients. |
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What is the danger of using Supplier
Financing?
It is very dangerous to use supplier financing
for several reasons: a) The importer is always
under the control of the supplier and might end
up being bypassed easily or end up being a
glorified agent of the supplier. b) Being a
captive buyer of the supplier, the importer does
not have the ability to get the best deal from
the supplier. c) In times of economic down turns
or credit crunch, the supplier might not be able
to continue financing the importer which could
be fatal for the importer. d) When the supplier
is giving terms to the importer, the supplier
will not give priority to the importer but give
priority to other buyers who have opened LCs or
are capable of paying on their own. This means
that the captive buyer often does not get his
goods on time or in proper quality or quantity.
However with it own financing provided by
Ashford, all the above risks are neutralized.
With it own financing, the importer is
independent from the supplier, can negotiate
with any supplier from a position of strength
and get the best deal. If there is a credit
crunch in the supplier’s country, the importer
with its independent financing from Ashford, can
source goods from another supplier or another
country. When the importer opens it own letter
of credit through Ashford, the supplier will
make sure that it delivers on time so it can get
paid under the LC. Ashford’s financing provides
the importer vital independence and financial
strength to manage its own destiny. |
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How is Ashford different than Venture
Funding?
Ashford provides transactional venture capital
without any equity dilution. Venture capital
funding will always lead to equity dilution.
With Ashford’s unique financing, the borrower
can grow with unlimited funding for qualified
transactions without any loss of equity. |
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What is the main advantage of using
Ashford’s funding?
Ashford provides unlimited funding to its
borrowers to grow without any loss in equity.
Moreover Ashford’s financing provides its
borrowers the financial strengths to mange their
own destiny. |
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How long does a typical transaction
last?
From 90 to 120 days if the transaction involves
both PO and receivable financing. If just PO
then about 30 to 60 days. It can be shorter if
the transaction involves air shipment or is a
domestic transaction. |
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If you are doing PO financing do we also
have to factor the receivables with you?
No. In some cases, the PO amount is about 75% to
85% or more so there is no room for factoring.
In those cases, Ashford just funds the
transactions till we get paid by the end buyers.
In some cases, there is a Factor or Bank
involved who will do the factoring and take out
Ashford once the goods have been delivered and
invoiced. Generally, if there is no Factor
involved, Ashford will finance the whole cycle
from paying for the goods to carrying the
receivable and payment by the end buyer. |
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What if we’re already Factored?
We welcome companies that are already factored.
Ashford Finance works with many Factors in a
seamless fashion, where we finance the purchase
of the goods and once the goods are shipped to
the end buyers and invoiced, the Factor takes
over the transaction. Factors are a great source
of leads for Ashford Finance. A Factor benefits
from working with Ashford because: a) Ashford’s
Purchase Order financing generates more invoices
for the Factor to discount and b) very
importantly Ashford’s shipment specific
financing generates valid transactions where
fraudulent invoices, which is one of the biggest
risk in factoring, is highly unlikely. |
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How is Ashford Finance useful in the
restructuring of a company’s finances?
Ashford often works with bank and other
financial institutions in the restructuring of
their borrowers because of a deterioration of
the borrower’s finances; high growth of the
borrower leading to funding needs that cannot be
satisfied by the bank or the factor; or bank /
factor’s own desire to reduce the line to the
borrower. In these situations, Ashford Finance,
at their own risk, finances incremental new
inventory to generate incremental sales for the
borrower. Ashford is willing to take the risk
which the Borrower’s Factor and bank is
unwilling to do. The positive cash flow
generated from the Ashford funded transactions
are all incremental cash flow which can be used
to pay down or make the bank loan current or
take the Factor out of a perpetual over advance
situation. |
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Contact Ashford Finance for your
Purchase Order and Trade Finance needs. |
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