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Liquid Capital Southwest: Factoring Guide Page 1

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To maximize its usefulness, this guide is designed to be:



Printed duplex



Three-hole punched

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Liquid Capital Southwest’s

Factoring Guide

[email protected]

www.LiquidCapitalSouthwest.com Ph: 210.587.7245 Fax: 210.485.1405 March 4, 2014 v1

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4 Welcome to Liquid Capital

5 Liquid Capital’s factoring

process

7 Factoring checklist

8 Log in to the Client Web

9 Use the Client Web

10 Request customer credit

11 “Decision Tickets”

12 Customer credit

application

13 Client activity reports

14 Purchase reports

16 Collection reports

17 “OA’s” and “cc’s” on

Collection reports

19 Adjustment reports

21 Blue ribbon tips

22 Revise your invoices

23 Liquid Capital banking

24 Notices we send

25 Notes

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Welcome to Liquid Capital

Contact us

Corina 210.587.7106 210.776.8010 mobile [email protected] Elizabeth 210.340.1891 [email protected] Patty 210.587.7245 [email protected] Robert 210.587.7206 210.667.5760 mobile [email protected] Ron 210.587.6676 210.414.1514 mobile [email protected]

Our mailing address: 11703 Huebner Rd. #106-470 San Antonio, TX 78230

How to use this Guide

This guide is designed to be used in conjunction with a customized Excel spreadsheet we send you. This “Client Spreadsheet” contains forms to fill out for your account setup and forms you will use when you factor invoices. You will find instructions for the forms at the top of each tab on the spreadsheet.

E xam pl e: I nvoi ce Journal form from the Cl i ent S pre adshe et

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Liquid Capital’s factoring process

When you factor your invoices, you are selling them to us at a discount for immediate cash to support your working capital needs. There are a number of aspects to this process, as shown:

1. Receive order

• Client

Receives an order for goods or services

2. Extend credit

• Client

Requests a credit line for the customer on the online system.

• Liquid

Reviews the credit standing of this customer and

responds with an approval or a decline.

3. Provide credit protection

•Liquid

Provides an option for credit protection

4 .

S

ell invoice

• Client

Provides goods or services to customer

• Client

Sells and assigns the invoice, at full value, to Liquid

• Client

Sends original invoice to customer; includes

assignment/payable language

5. Post receivable

• Liquid

Receives invoice data and posts the receivable.

• Liquid

Maintains A/R records for five years.

6 .

Provide financing

• Liquid

Provides the cash advance to you on the receivable

electronially.

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7. Collect receivables

• Liquid

Receives check or EFT, with remittance advice.

• Liquid

Automated system performs cash aplication. Identifis

shortages and/or adjustments to payments.

• Liquid

Records detailed transaction information and send into to you

electronically.

• Liquid

Follows up on overdue payments.

8 .

Remit collected funds

• Liquid

Credits client account for payments received

• Liquid

Applies funds toward advance; forwards balance via EFT

9

.

Financial reporting

•Liquid Provides detailed records of transactions for convenient online access. Includes dispute and deduction information.

•Liquid Maintans records of transactions for five years. •Client Reviews reports, makes journal entrie

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Factoring checklist

Customers and billing

1. Do your customers have an available credit line? 2. Do you have proof of delivery or job completion? 3. Do your invoices have the Liquid Capital assignment? 4. Is your customer information up-to-date?

We need this paperwork

1. Invoice Journal: Email or fax 2. Cover sheet: Email or fax

3. Invoices and backup documentation: Email or fax 4. Client spreadsheet: EMAIL

Email and fax numbers

[email protected]. Be subject line-specific. Fax: 210.485.1405. Include cover sheet with no. pages.

Deadlines and Timing

Factoring requests: 10:30

Reserve release request (only): 11:00 ASAP wires: 9:30

Wire transfers: Post by the end of business day

ACH Deposits: Post the next business day. NOTE: The next business day after Friday is Monday.

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Log in to the Client Website

Our client website is available to you in real time, 24/7. When your account setup is complete, we issue you a Company (number) and a Password so you can monitor your account.

Record your login here:

Company: ________________ Password: __________________

 Enter: https://www.liquidcapitalweb.com.

 The login screen appears.

Enter your “Company” and “Password.”

 The “Main Summary” screen appears.

 From this screen, you use the drop-down lists to choose tasks: You can view, download, and print data; in the case of customer credit only, you enter data.

Login Screen

Main Summary Screen

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Check your A-R

DEBTOR LIST / AGING:

“Current day aging with balance” 1. Expand view.

2. Click “Invoice #” to see invoice information.

3. To read any posted Collection Notes: Scroll down to “Notes.”

Check ineligible invoices

DEBTOR LIST / AGING: “Invoice list”

Check: “Ignore data range” and “Ineligible”

View reserve deposits/releases

DEBTOR LIST / AGING

:

“Reserve activity”

1. Select date range

2. Expand all or click on the “+” hyperlink

View checks or EFTS received

COLLECTION / PURCHASE HISTORY:

“Checks processed”

1. Expand all or click on hyperlink. 2. Click on Check# hyperlink to view

payment information.

3. Scroll down to view check or EFT image.

Run various reports

REPORTS VIEWED IN PDF

1. Select report you want 2. Choose your parameters.

Check customer credit

CREDIT INFORMATION:

“Debtor credit availability”

You will see debtor list/availability

Enter a credit request

Note: Check customer credit (above) before submitting a credit request.

DATA ENTRY: “Credit request”

1. Select “I am Entering a New Debtor Below” or choose from the list.

2. If new customer, screen appears. Enter data (Reference # is a unique number of your choice.)

3. On next screen: Enter the TOTAL CREDIT LINE you would like. Note: If you are requesting an increase in credit, you still enter the TOTAL CREDIT LINE.

Check available cash reserves

STATUS: “Client summary”

Scroll to bottom left of screen

NOTE: You may see an amount on this screen that is different from the amount you see when you log in. Available cash reserves take into account your ineligible invoices and any fees that accumulate.

Print a copy of a report

COLLECTION/PURCHASE:

“Processed batches”

1. Select “Starting” date and “as of” date 2. Expand all or click on + hyperlink.

NOTE: “Cash Posting” is a Collection. This will be a negative number (a credit).

Use the Client Web

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How to request a customer credit line

We pre-approved credit lines for your customers. These credit lines are intended not as

credit guarantees but as guidelines and references to help you make good business decisions. You request customer credit on our client website by following these steps:

1. From Main Summary:

 Click the Data Entry tab for the drop-list.

 Select Credit Request.

2. Selection screen appears.

 If this is a new customer select: “I

am Entering a New Debtor Below.”

 For an existing customer,choose from the customer list.

3. Data entry screen appears (for new customer only

 Enter data in all fields. (Reference# is a unique number of your choice.)

4. Credit request screen appears.

 Enter credit request amount. Remember: If you are requesting a credit increase, enter the TOTAL credit line you would like, not the amount of the increase.

 (Shipping date can be today’s date) In 24-48 hours, you will receive a “Decision Ticket” from our credit analyst.

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Credit Decision Tickets

Once our credit analysts have finished their assessment, they send you a “Decision Ticket” to let you know whether your request has been approved or declined.

Sample Decision Ticket #1

Sample Decision Ticket #2

Customer Credit Application

If our analysts decline to grant credit, they may suggest you ask your customer to fill out a

Customer Credit Application, which you can find on the next page. (If you would like an

application in Microsoft Word format to customize with your logo, please let us know.)

When you receive a completed Application, email or fax it to us, and we will forward it.

A. “Current limit”: The credit line in place before your request.

B. “New limit would be”:

You may have received the line you requested, but it could be less— sometimes it is more.

C. “Current limit”:

Defaults to $2500.

D. “Comments”: You may see “requires credit application”



Credit declined Credit approved A B # 2 D C

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Customer Credit Application

Business Contact Information Company name:

Phone: Fax: E-mail:

Registered company address:

City: State: ZIP Code:

Date business commenced: Number of Employees

Sole proprietorship: Partnership: Corporation: Other:

BUSINESS AND CREDIT INFORMATION

Exact Corporate Name (if Corp.) Incorporation Date:

Primary business address: State of Incorporation:

How long at current address? Federal Tax ID:

Telephone: Fax: E-mail:

Bank name:

Bank address: Phone:

City: San Antonio State: ZIP Code:

Type of account Account number or Banker’s name and telephone Highest Balance

BUSINESS/TRADE REFERENCES

Company name (1)

Address:

Phone: Fax: E-mail:

Type of account: Credit limit:

Address:

Phone: Fax: E-mail:

Type of account: Credit limit:

Address:

Phone: Fax: Email:

Type of account: Credit limit:

AGREEMENT

I, the undersigned, legally authorized in the Company, do declare that the information given by myself is correct to the best of my knowledge. I authorize your Company to conduct a full investigation with my bank and/or trade references for the sole purpose of credit granting. I also acknowledge tha t this credit information will be periodically updated for the purpose of reviewing our credit standing. The credit granting remains your Company’s prerogative and therefore could be cancelled at any time without notice.

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Client Activity Reports

The following section provides examples of the reports we send you whenever there is activity on your account:

Purchase Reports:

Detail factoring and reserve release activity

Collection Reports:

Provide the details of customer payments

Adjustment Reports:

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Client Activity Reports

Purchase Reports

When you factor invoices, we send you a purchase report on a “Control Sheet.” This

sample reports the purchase of two invoices. The discount rate is 3%, and 20% is held in escrow reserves. The explanation is on the opposite page.

Additional

 You receive a Purchase Report when we release cash reserves to you.

 When you factor invoices, we can release any available cash reserves. When we do that, you receive one Purchase Report that lists both the factoring and the reserve release transactions.

Sample 1: Purchase Report #10113

4

1

Invoice # Debtor Date Funded Amount Held/Denied Bought Amount 3364 Goodson Co. 12/1/2013 2034.36 2642.03 3365 Johnson Inc. 12/1/2013 255.42 331.72 2289.78 2973.75

Adjustments Posted Against Control Sheet:

Description Account Amount

Wire & Bank Charges 5650 18.00

Invoices Sold: 2973.75

2

Fee Deducted (87.22)

3

Reserve Escrow Deducted (581.48)

5

Expenses Deducted: (18.00)

Reserves Returned

Proceeds Owed/Paid to Client 2220.71

Reserve Escrow Deducted (20% * face value): Invoice #3364: $ 528.41

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Sample 1: Purchase Report, explained

1. Bought Amount: The total face value of the two invoices purchased is $2,973.75. “Bought Amount” equals “Invoices Sold.”

2. Fee deducted: 3% ($87.22) deducted from the advance.

3. Reserve Escrow deducted: 20% ($581.48) deducted from the advance.

Escrow reserves (minus any extra fees) will be released into cash reserves when the invoices are paid.

4. Funded Amount: $2289.78 is the difference between the “Bought Amount” of $2,973.75 and the sum of Fee Deducted ($87.22) and Reserve Escrow Deducted ($581.48).

5. Expenses Deducted: Funds were advanced by wire transfer, for an $18 charge.

How the Funded Amount is calculated

% of invoice face value

1

Bought Amount $ 2,973.75 100%

2

Fee deducted (87.22) (3%)

3

Escrow reserve deducted (581.48) (20%)

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Collection Reports

Customer payments are reported on Collection Reports. One report may include multiple payments from multiple customers. This first example is a simple one, with one customer paying one invoice that is not overdue. The invoice paid is from Sample Report 1.

Explanation:

1. Escrow amount: The 20% total we held back at funding.

2. Fee earned: There is no extra fee since the invoice was paid in under 30 days.

3. Applied to A/R: The amount is the face value of the purchased invoice ($2,642.03).

4. Reserve Escrow Rebated: The full 20%, as the invoice was paid within 30 days.

5. Additional Cash Reserves Held: Equal to the Reserve Escrow Rebated, since there

were no extra fees deducted. This is a credit to Cash Reserves.

Sample 2: Collection Report

1

2

Payor/Check# Invoice# Purchased Buy# Invoice

Amount Days Check Amount Payment Amount Adjust Type Adjust Amount Escrow Amount Fee earned Reserve held Goodson Co.

5985 2,642.03

3364 12/1/2013 10113 2,642.03 19 2,642.03 528.41 0

Total Amount Collected 2,642.03

3

Applied to A/R 2,642.03

4

Reserve Escrow Rebated 528.41

5

Additional cash Reserves Held (528.41)

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About invoices prefixed with “OA” or “cc”

In the next sample report, you will see two invoices with “prefixes.” One is prefixed by a “cc” and another by an “OA.” Here is an explanation of this coding:

A. “cc” prefix: Denotes a payment for a small invoice we either did not factor or we

previously charged back.

 A “cc” is credited directly to cash reserves.

B. “OA” prefix: Denotes a payment for a larger invoice that does not match to an invoice in our system.

 An “OA” payment is not directly credited to cash reserves like a “cc.”

Instead, it is posted as a credit to Accounts Receivable.

 “OA’s” are usually, but not always, invoices that we did not factor.

 An “OA” can also indicate that the remittance advice on the check or EFT from which we posted was incomplete, incorrect, or missing. In this case, the “OA” could be for an invoice we have on file.

 When you send us the corresponding invoice or let us know to which invoice the OA applies, we remove the “OA” from your Accounts Receivable and post the funds as a credit to your cash reserves (as shown in Sample 4).

To clear an “OA,” we need the corresponding invoice.

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Sample 3: Collection Report

Explanation

A. Invoice #3365: Purchased 12/1/2013

 Buy#: Reference to the Purchase Report. (See Sample 1. Purchase Report #10113.)

 Invoice Amount and Payment: Show that the invoice was paid in full.

 Days: Payment posted 5 days over terms.

B. Invoice cc-3360: An invoice we did not purchase.

 Adjust Amount: The funds are credited to cash reserves.

C. Invoice OA-3250: An invoice that could not be matched to an invoice in our system.

 The funds are posted as a credit to Accounts Receivable.

 There is no Escrow Amount and no “Adjust type” as there is for the “cc.”

1. Applied to Accounts Receivable: The payment for Invoice #3365 and OA-3250 (but not cc-3360, as it is posted to cash reserves).

2. Reserve Escrow Rebated: $66.34 is the 20% we held back from the funding of Invoice #3365.

3. Additional Cash Reserves Held: $64.68 is $1.66 less than the reserve escrow rebated. The invoice was paid in 35 days, so a prorated daily fee was deducted.

Sample 3: Collection Report

Payor/Check# Invoice# Purchased Buy# Invoice

Amount Days Check Amount Payment Amount Adjust Type Adjust Amount Escrow Amount Fee earned Reserve held Johnson Co. 5985 931.72

A

3365 12/1/2013 10113 331.72 35 331.72 66.34

B

cc-3360 0 0 100 C/B -100.00

C

oa-3250 0 500 931.72 66.34

Total Amount Collected _931.72

1

Applied to A/R _(831.72)

2

3

Reserve Escrow Rebated _(66.34) Additional cash Reserves Held _(64.68)

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Adjustment Reports

When we reconcile your account, we send you an Adjustment Report. The information on the report lets you know that:

 An on-account payment has been credited to your cash reserves, as shown in Sample 4.

 An invoice was charged back due to age or dispute or for another reason, as shown in Sample 5.

Sample 4. Adjustment of an “OA”

Explanation

1. A/R Amount: Invoice OA-3250, in the amount of $500.00, was posted as a credit on the A/R.

2. Adjust Type: This is the code used to show the type of transaction. The C/B (chargeback) removes the invoice from your A-R.

3. Reserve Amount: The $500 is credited to Cash Reserves.

Sample 4. Adjustment Report

Debtor Invoice# Invoice Date Age Buy# Invoice

Amount Adjust Type A/R Amount Escrow Amount Fee Earned Reserve Amount Write Off Amount Johnson

Co. OA-3250 18/02/2014 2 123 C/B (500) (500)

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Sample 5. Charging back an over-age invoice

When we charge back an invoice (e.g., because it is a duplicate or over-age or disputed), you are paying us back for what we advanced on the invoice when we purchased it, plus any additional fees (e.g., for days over 30). The chargeback is debited from cash reserves.

Explanation

A. Invoice Amount: The face value of the invoice, $1479.50.

B. Buy#: 10113 is the number of the Purchase Report for this invoice. C. Age: The number of days the invoice was on our books.

1. The Reserve Amount of $1333.03 is the total amount debited from cash reserves. 2. The Fee Earned, $149.43, is the additional fee for days over 30.

You can refer to Purchase Report #10113 to see the Funded Amount. You can also calculate it this way:

Reserve Amount: $ 1333.03 Fee Earned: (149.43)

Funded Amount: $ 1183.60

Sample 5. Adjustment Report

C

B

A

Debtor Inv

# Invoice Date Age Buy# Invoice Amount Adjust Type Amount A/R Escrow Amount Fee Earned Reserve Amount Write Off Amount Goodson 1033 11/9/213 145 10113 1479.50 c/b 1479.50 295.90 149.43 1333.03

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Our top ten list for a blue

ribbon relationship

1. Use the Factoring Checklist: Go through this before you send us your funding request to make sure you’re not forgetting anything.

2. Follow the Invoice Guidelines: Double-check your invoices against our guidelines,

especially if you are making any changes in your invoices.

3. Give us time. When you send in a funding request, you can’t count on how many folks

are ahead of you, and we need time to do our verifications.

4. Go through the reports we send you: Let us know right away if there is an issue.

5. Enter your own customer credit requests: You are in the best position to know how much credit you need. Request credit before you take on a job. You want to know

that you’ll be paid.

6. Be specific in your email subject lines: We receive lots of emails, and it helps if what you are writing about is named on your subject line.

7. Learn to use the Client Web to answer basic questions. Although we are happy to

look up information for you, this helps us all.

8. Record your login information: You’ll always have it handy.

9. Send us your customer information, and keep it up-to-date: We need this information so we can send out our Notices, and our service center needs this information so they can follow up on any overdue invoices.

10. Give your customers a heads-up: Let them know that we’re the folks helping you

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Revise your invoices

Please follow these guidelines for your invoices:

Company name and contact info:

 Use your company’s legal name.

 If you plan to use a d/b/a, make sure you have filed with the County and the Secretary of State.

Omit your mailing and physical address:

 To avoid misdirected payments, omit your address(es).

 Do include your contact information: Phone, fax, email, website.

Liquid Capital’s address at the top:

Invoice date and payment terms

:

 Invoices cannot be post-dated.

 Payment terms: Make sure these are correct.

Line 1 of the bill-to:

 Commercial invoices: The Customer’s company name (not a contact at the company)

 Government invoices: The entity that pays, not the department or agency with whom you have the contract (e.g., DFAS—not U.S. Air Force)

Additional bill-to lines:

 Company address, phone, fax, email: We need the complete information for the AP department (because they pay the bills)

 You can add additional contacts (e.g., a job supervisor)

Any specialized language:

 For the produce industry: PACA

This invoice is assigned and payable only to:

Liquid Capital Exchange, Inc.

P. O. Box 17000

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FAQ’s

What do I do if I receive a check from a customer?

If you receive a check from a factoring customer, do not deposit it: Please let us know about it, and then send it directly to our service center so that you can receive credit as soon as possible. If you received an electronic payment, arrange to pay us by check or EFT. For reference, here are the banking instructions for Liquid Capital’s service center:

Liquid Capital Banking

Mailing addresses Wire transfers ACH deposits

Liquid Capital Exchange, Inc.

P. O. Box 17000 Greenville, SC 29606

Overnight (non-USPS) mail

25 Woods Lake Rd. #102 Greenville, SC 29607

Bank of America BOFAUS3N 1901 Main St. Columbia, SC 29201 ABA: 026 009 593 Acct: 000 776 425 883

Beneficiary: Liquid Capital

Exchange, Inc.

Additional information field:

Reference your company and invoice(s) paid.

Bank of America 1901 Main St. Columbia, SC 29201 ABA: 053 904 483 Acct: 000 776 425 883

FAQ: Should I notify my customers about Liquid Capital?

It always helps to give customers the heads-up that we will be introducing ourselves to them. On the next page you will see examples of the Notices we send them. We emphasize your company’s growth and our partnership. You can do the same in a quick email or phone call to them.

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Notice of Assignment: Commercial customers

(Our client’s company name)

is pleased to announce that they have obtained the services of Liquid Capital Exchange, Inc. as a partner in processing accounts receivable and as a source of additional working capital. This will enable the Company to accommodate the changes that their continued growth brings, so they can provide you with the highest quality of service.

This arrangement includes the assignment of all payments that are or become due on their accounts to Liquid Capital Exchange, Inc. under all applicable laws, including the Uniform Commercial Code. This requires that you remit all payments to Liquid Capital Exchange, Inc. Please make the notation on your ledger, and transmit payment according to these directions:

Checks ACH Deposits Wire Transfers

Liquid Capital Exchange, Inc. Liquid Capital Exchange, Inc. Liquid Capital Exchange, Inc. P. O. Box 17000 Bank of America Bank of America

Greenville, SC 29606 ABA/Routing #053 904 483 ABA/Routing #026 009 593 Acct # 000 776 425 883 Acct # 000 776 425 883

On your remittance, please reference the invoice(s) so we can post your payment properly.

If you have any questions, please call 210.587.7245 or contact us via email or fax, as listed on the cover sheet attached to this Notice. Thank you.

  

Assignment of Claims: Government customers

This has reference to contract No. __________, dated _________, entered into between (your company name and

address) and (the government entity) for all products and/or services covered by this Contract. Moneys due or to

become due under the contract described above have been assigned to the undersigned under the provisions of the Assignment of Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15. A true copy of the instrument of assignment executed by the contractor on January 20, 2014, is attached to the original notice. All payments due or to become due under this contract should be made to the undersigned assignee, Liquid Capital Exchange, Inc., Cage

Code 4THK3 as follows:

Liquid Capital Exchange, Inc. (CAGE CODE 4THK3) Bank of America

New York, NY 10001

ABA: 053 904 483 Account: 000 776 425 883

Please return to the undersigned a copy of the Amendment of Solicitation/Modification of Contract and three copies of this notice with appropriate notations showing the date and hour of receipt, and signed by the person acknowledging receipt on behalf of the addressee.

This Notice and the instructions herein will remain in full force and effect until you are notified to the contrary in writing by Liquid Capital Exchange, Inc.

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