Factoring Finance

Here at Zions Bank, our goal is to deliver innovative working capital solutions that support your business and help you achieve full growth potential. To do this, we offer a flexible source of funding such as factoring. This often provides available capital for growing or transitioning businesses, in various industries, as a bridge to conventional bank financing.

What Is Factoring?

Factoring is working capital financing provided through the discounted purchase of qualified accounts receivable, typically offered to rapidly growing companies or businesses transitioning financially. The factor purchases eligible invoices from a completed service, or accepted product, and essentially transfers the credit risk from the client to the client’s customer.

  1. Client issues an invoice to customer
  2. The invoice is sold to ABBC
  3. Client uses cash for growth, payroll, and/or other expenses
  4. Invoice pays through client's lockbox
  5. ABBC receives the payment
  6. The client receives reserve amount less fees

Great, so you understand the product and basic process. Would you be interested in hearing how we may be able to offer you a better structure and price with a bank managed factoring facility?

It certainly can be more expensive than traditional bank financing but for the additional flexibility, frequently it is a trade-off that many companies are willing to make. Plus, it is viewed as bridge financing, a 6-36 month solution on average.

If you have an existing line of credit and you are happy with the structure and line amount, you should not look at making a change.

Much of our contact is transparent to the customer. We will need to have invoice payments sent to a Zions Bank lockbox and notification is made to the customer, usually the AP department, regarding the payment redirect. We also verify a certain percentage of outstanding invoices. This can be done via portal, email, or phone call. Every situation is different. Plus, having a Bank managed working capital facility gives a business credibility with its customers.

Our customers actually prefer using our lockbox as we handle their invoice collection paperwork and all the information is available online wherever/whenever they need to see it.

Benefits of Factoring

Accelerate Cash Flow

Accelerate cash flow with a business-to-business accounts receivable financing. When a loan or line of credit isn’t quite right for your business, consider factoring finance. You can get up to a 90% advance against the face amount of your chosen business-to-business accounts receivables invoices, and the day after your customer pays, the remaining amount is put in your Zions Bank® checking account less the fee for financing the invoice.

The only requirement is that the account receivable be for a completed business-to-business service or physical items that the customer has received title for. It’s that easy to get cash in a few days instead of a few months from your customer.

Immediate Cash Without Debt

When you choose factoring you can access immediate short-term cash without taking on short or long-term debt, and, without diluting equity by giving an ownership stake to an investor in exchange for cash. Also, you can quickly access cash to support operations, make payroll, or purchase goods. You don’t lose money by giving discounts to customers to get them to pay more quickly.

Even More Benefits

  • No contracts
  • No termination notice needed if you move from factoring to another Zions Bank financing solution
  • Flexible - you choose which invoices to factor
  • No financial performance covenants needed
  • Competitive rates and next-day funding available
  • Valid with domestic and/or foreign receivables
  • Credit assistance and free D&B reports for your new customers

Is Factoring Finance Right for Your Business?

Companies that don’t fit traditional lending requirements or whose financial needs are growing faster than a bank’s willingness to lend money benefit from factoring. These include:

  • New businesses
  • Business owners with lower personal credit scores
  • Companies that are highly leveraged or cash-flow-tight
  • Seasonal companies
  • Companies with tax issues, such as past-due payroll taxes
  • Companies that have undergone a recent disruption
  • Companies with a high or single customer concentration
  • Companies that can’t support financial performance covenants
  • Rapidly growing companies

Companies and Industries Serviced

  • Staffing
  • Service Companies
  • Trucking
  • Energy
  • Manufacturing
  • Wholesalers / Distributors
  • Government Contractors

Business Challenges

At Zions Bank, we recognize that business challenges sometimes create non-traditional banking needs. In these situations, a more aggressive source of working capital financing may be the answer but also may be difficult to find. We look at the following challenges as opportunities to explore creative funding solutions for our customers and prospects:

  • Newly formed, early stage
  • High-growth
  • Seasonality
  • Acquisitions
  • New large orders
  • Owners with limited net worth and/or damaged credit
  • High debt or inadequate company net worth
  • Highly-leveraged
  • Leveraged or management buyouts
  • Inadequate advance rate
  • Turnaround or restructure
  • Unhappy with existing factoring or asset based lending relationship
  • Payroll tax issues or liens
  • Bankruptcy (DIP)
  • Non-compliance with required loan covenants
  • Inadequate existing revolving loan facility
  • Loan facilities anticipating decline
  • Concentration

The Zions Bank Business Credit Advantage

  • More than 100 years of combined business credit experience
  • Utah and Idaho based institution, through the business credit division, providing same day funding for qualified clients
  • Unlike independent Business Credit providers, your funds are federally insured
  • Our low cost of capital allows for competitive client pricing
  • Flexible program compared to big bank structures
  • Advance rates up to 95% of the invoice amount
  • No exit fees with 60 day notice and no long-term commitments
  • Bridge financing that potentially leads to a traditional bank facility

Success Stories

Learn more about how the Zions Bank Business Credit division has provided credit financing to various industries across the country.

May 2016

The subject is a government contracting company, specializing in cyber security solutions and training for the Department of Defense. Due to their emphasis on R&D, they had several years of losses and negative equity.

Facility: $3,000,000
Advance Rate: 90%
Term: No term, 60 day notice to terminate

Most of the company's funding came from private investors, but they were in need of a working capital solution flexible enough to accommodate their growth. Zions was able to provide a substantial factoring line, encouraging the company to move all of their accounts to the Bank. In March of 2016 the company asked to terminate their relationship in order to move to another alternative lender promising to offer a $1MM LOC over and above their factoring line. Once it came time to sign with the other financing company, they asked to return because the terms of the relationship were not what they had been promised. As of May, the company renewed their relationship with the Bank.

The company will utilize the factoring facility until they qualify for a more substantial conventional line, which is estimated to be in 12-18 months.

February 2016

Utah Business Banker identified a company that did not qualify for a traditional bank or SBA line of credit due to the amount of derogatory credit that was reported on the two active owners and a passive investor who would not guarantee the facility.

Facility: $500,000
Advance Rate: 80%
Term: No term, 60 day notice to terminate
Personal Guarantees: Only active owners over 20%, passive investor of 25% waived

The company is rapidly growing and needed assistance with cash flow. The company, while profitable in 2015, lost a small amount each year in 2014 and 2013, as they started operations. They also have concentrations with a few customers who require Net 60 day terms and where payment is 90 to 120 days after the advertisement is placed. Longer terms and slow payment were impairing cash flow and hindering growth.

The new facility will accommodate these extended terms and the company will use added availability to acquire additional projects.

The company currently has their main operating accounts at another bank. With the factoring facility in place, they will move all accounts to Zions Bank.

Correspondent Banking

  • The capacity to fund transactions up to $50MM*
  • A unique combination of business credit services and commercial banking creating an advantage with competitive pricing and relationship based bankers
  • Over 100 years of combined business credit experience
  • Financing a variety of business types as well as unique, non-traditional situations
  • No long term contracts
  • Ability to strengthen your customer relationships
  • Opportunity for our correspondent bank partners to participate in the client relationship and fee income

*Loans subject to credit approval. Terms and conditions apply.


The following forms are available online:

Contact Us

For Conventional Working Capital Financing and to start the cash flow process, feel free to contact us.

Ryan Theriault
Vice President