Cash Flow – Accounts Receivables Program

Cash Flow Financing vs. Typical Factor Program

Cash flow is crucial to a business for a multiple of reasons:
• Payroll Responsibilities
• Keep current on Payables
• To be able to purchase material for the next job
• To seek out and find new customers needing extended terms
• To fuel continued growth

Chesapeake Bank’s Cash Flow financing program provides businesses with a solution that provides instant access to cash and predictable cash flow. For businesses not flushed with cash, factoring the accounts receivable through a non-bank financial institution has been a historically viable alternative for decades. However, factoring does have significant drawbacks for quality businesses. As a result, these drawbacks have turned business owners away from this alternative.

Chesapeake Bank’s Cash Flow financing program overcomes these drawbacks and offers a bank supported, user friendly program that will provide next day cash. Let’s take a look at the differences between Chesapeake Bank’s Cash Flow program and a typical factor program.

Feature	Cash Flow	Typical Factor Company	Cash Flow Benefit
Financial Strength	Chesapeake Bank is a full service, FDIC member bank. A publically traded company with financial information readily available	Typically, a non-bank entity. Financial information is often difficult to obtain	Peace of mind knowing that your are backed by a profitable, well secured bank
Advance Rate	90 % of the invoice value	80 % - 85 % of the invoice value	More cash availability from day one
Pricing	Flat % discount rate, competitively priced	Tiered discount rates, plus administrative, audit, and transaction fees.	Predictable, lower cost pricing will save $$$ and make budgeting easier
Agreement	Open ended agreement with 60 day termination clause, no penalties after six months	At least a one year agreement, automatically renewed if not terminated, early termination fees assessed	Provides flexibility to business to adjust to business cycles and needs
Anonymity	No advice notification. Invoicing in business name, payment checks payable to business, blind lock box	Advice notification required, invoice stamped with factor information, checks payable to factor, factor lock box established.	Removes the perceived intrusion of a third party between the business and customer
Verification Audits	Random, user friendly audits with no payment collection pressure	Audits required with each invoice, payment collection pressure common	Professional, user friendly approach
Reserve Escrow Account	Interest bearing, savings account established in your name for the non-advanced 10% as a reserve against bad debt. Reconciled monthly	No reserve account established	Reserve is a hedge against an invoice non-payment. Eases the ”pay back” pressure in case of a default
Minimum Volume Commitment	Modest minimum as a “good faith” commitment. No penalties assessed	Hard minimums are established and penalties assessed if not met.	Allows for seasonality and flexibility on monthly needs

When deciding upon on which facility makes the most sense for funding your accounts receivable. Review this comparison. I think that you will agree that Chesapeake Bank’s Cash Flow program is a better alternative for your cash flow needs