How Does Gibraltar Evaluate Risk for Factoring Transactions?

Gibraltar Business Capital provides stability during periods of transformation for small and mid-market businesses. In the seventh video in a multi-part video series, Gibraltar President Scott Winicour talks about how Gibraltar evaluates risk and pricing based on accounts receivable balances.

“A factor will look at the credit worthiness and the likelihood and willingness of your receivables to pay in a timely manner, to evaluate the risk involved in the transaction,” Winicour says. “There’s no one-size-fits-all cost approach that any factor takes. It’s unique to your specific situation.”

Winicour points to two examples of how costs differentiate based on risk: An accounts receivable balance based 100% on one customer vs. 10 customers that make up 10% each of the receivable balance.

He explains, “If you have 10 customers, then the risk is spread out and distributed among the customers.”

The result? The more diversified your customer base and accounts receivable balance, the better priced the factoring arrangement.

What other considerations are weighed in factoring? Click here to watch the 13-part video series and find out the steps Gibraltar takes with its unique approach to factoring.

Want to learn how your accounts receivables balance is evaluated? Click here to contact us today and request a factoring quote.

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