Denim’s factoring is the most flexible and comprehensive in the business, with customizable carrier payments, invoicing, and collections. Customers only pay for the capital they are using at any given time, which is as close as you can get to a line of credit without going to a bank.
The platform gives you a lot of flexibility to use Factored and Non-Factored jobs, to enable Express Factoring, and comprehensive reporting for your customers and contractors, for invoices and payments, and an insightful dashboard.
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An example of how Factoring works
When you onboard with Denim, you can set up the pricing and the terms for each job that you create in Denim account. Here is a break down for a hypothetical $1000 job.
Receivable: This is the amount billed to your customer, in this case $1000.
Advance: This is the percentage of the receivable that Denim pays up front. It is typically 90% of the receivable. There are two components to the advance.
- Carrier pay: Denim will pay the amount billed to you by your carrier. Let's say your carrier invoice for a job is $950 (95%). In this case, we would pay your carrier the entire amount even though your typical advance is only 90%. This is to ensure a positive experience for your carriers and that they're paid in one lump sum.
- Client advance: Let's say your carrier invoice for a job is $850 (85%). In this case, we would pay your carrier in full, but there would be a 5% remainder from your advance. As the client, you are entitled to this difference which in this case would be $50.
Rebate: This amount is equal to the receivable minus the advance minus the fee. It is paid to you via Denim Cash, once your customer pays Denim in full for the job. See Denim Cash for more details.
Factor Fee: This is the percentage that you have agreed to pay for financing each invoice. It is collected at the time your customer pays Denim***. The factor fee is only charged for factored invoices. For non-factored invoices, other charges may apply, but you will not pay a factor fee.
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Example job details view
Here is another example.
(Please see See and manage job details for more information.)
💡 Note: Although the fee is charged at the time of collecting, the fee amount is determined at the time a job is approved. If the billing amount ever changes, please note the factor fee cannot be changed because it is locked at the time of the approving the job. Therefore it is important that you bill the correct amount on your first submission.
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Common questions on Factoring
Q: How is my factoring fee calculated?
A: Denim breaks down your factoring fee into a daily rate, and then applies that rate by the customer’s net terms. This calculation is linear which means that your daily rate stays the same even after their net terms are reached.
Q: How do I see my projected factoring fee?
A: The projected factoring fee and the rebates are based on the customers' net terms.
Q: How do I know when the fee is finalized?
A: Once the customer pays their invoice, the factoring fee and the rebate are finalized based on their days to pay settings. The amount is automatically updated on that job's details page; a lock icon there shows that the amount is finalized. (Please see Contractor: Payment Settings, and Global Settings: Payments to Contractor for more details.)
Q: How it helps me save money?
A: You are paying only for the capital that you are using at a given moment. If your customer ends up paying faster, your factoring fee will be less than your projected fee.