Contract funding is provided to businesses that do not produce their own products “in house” but rather contract out manufacture and fulfillment to another company either foreign or domestic.
With contract funding in place, money is provided to have the product produced, insured and delivered to your customer.
Typically, there will be an Accounts Receivables factoring relationship in place to pay off the contract funding debt once the product is delivered.
This type of funding is often used for import and export.
Criteria
- Funding will be provided based on the amount needed to produce, insure and
ship not on the amount of the invoice.
- Only transactions where the customers are businesses are eligible for funding.
- Contract funding is not for inventory build up, but for fulfillment only.
Required Documents
- Copy of the contract
- Schedule of cash requirements to fill the order (cost breakdown)
- Transaction timeline
- Current aged Accounts Payable report
- Current aged Account Receivable report
- Factoring Agreement
- Personal Financial Statements of Principals
Transactions That DO NOT Qualify
- Services
- Goods that will become part of a building or real estate
- Goods delivered on consignment (your customer can not have the option of
returning the goods)
- Goods with no specific delivery date (contract funding is not for inventory
build-up)
- Goods that require long production cycles
- Goods being manufactured by inexperienced company
- Un-creditworthy customer
