Resource Center
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What is Asset-Based Lending and Is It Right for Me?
Asset-Based Lending is a business loan secured by collateral (the assets of your business). The loan, or line of credit, is secured by inventory, accounts receivable and/or other balance-sheet assets. Asset-Based Lending, or “ABL” as it’s commonly referred to, is one of Amerisource’s most popular financing structures. Ideal for growth companies, Amerisource’s asset-based revolving line of credit combines the ease and convenience of a bank line of credit governed by a “borrowing base” (a calculation used by lenders to determine financing availability at a given point in time) with the flexibility and increased availability of asset-based lending. LEARN MORE
What is Accounts Receivable Factoring and How Can It Help Me?
Accounts Receivable Factoring is a specific type of asset-financing loan in which a company uses its accounts receivable (i.e. obligations owed by the company’s customers) as collateral in a financing agreement. A/R Factoring, or just “Factoring” as it’s commonly referred to, is another one of our most popular financing programs. At Amerisource, we don’t believe in a one-size-fits-all solution. We’ll never simply offer a “cookie cutter” approach to financing your business. We understand that every company is unique and that individual situations often call for a customized solution, so we go to great lengths to develop a program tailored to meet your individual needs. This flexibility is one of the hallmarks of our Freedom To Grow® philosophy. LEARN MORE
What is Debtor-In-Possession (DIP) Financing?
Debtor-in-Possession (commonly referred to as “DIP”) Financing is essentially financing provided to companies who have filed for bankruptcy protection and reorganization under Chapter 11 of the United States Code. DIP Financing is provided on a post-petition basis — after the filing date of the company’s bankruptcy. Amerisource is one of the few lenders in America actively pursuing these arrangements. The benefits of using Amerisource for DIP Financing include:
- Experience and Expertise – Amerisource has a long track record and lengthy history of success in providing DIP Financing. In conjunction with your attorney, we’ll help you navigate through the process rapidly and efficiently.
- Flexibility – Amerisource’s DIP Financing structures are extremely flexible and can accommodate needs as small as $250,000 and as large as $15,000,000.
- Minimize Legal Costs – Amerisource has time-tested and straight-forward document template forms for requesting and obtaining DIP Financing approval from the Bankruptcy Court. These forms have a proven track record of success, reducing your legal fees and costs, and helping to expedite the Bankruptcy Court approval process.
- Quicker Turnaround – All Debtor-in-Possession financing requests must be approved by the Bankruptcy Court. As a result, DIP Financing is notorious for the slow approval process. Amerisource will work directly with your legal counsel to help you navigate through the process, helping you avoid common obstacles and reducing document-preparation delays.
What is Credit Protection and Why Do I Need It?
Credit protection involves screening and monitoring of your existing (and prospective) key customers, allowing you to manage your company’s credit exposure to avoid a potentially crippling loss of profitability. Amerisource Credit Protection includes:
- Credit investigation of new customers – The first defense against bad debt losses is to investigate a new customers’ creditworthiness —before you sell to them. Amerisource’s seasoned credit experts will research and analyze the financial health and credit history of your potential customers, allowing you to make an educated decision and significantly reduce your exposure to bad debt.
- Ongoing Monitoring of Customer Creditworthiness – Amerisource will continue to monitor that credit, tracking pay trends and maintaining individual credit limits for all of your key customers. We’ll identify changes in your customer’s financial condition and help you take necessary action before it’s too late. So sleep well at night knowing your credit exposures are being continuously monitored by Amerisource.
- Absorbing Bad Debt Losses – If a customer is unable to pay you, Amerisource will absorb the loss, up to the customer’s approved credit limit. This flexible add-on for either non-recourse factoring programs or as a credit guaranty allows you to choose the minimum qualifying loss threshold, giving you added protection and peace of mind.
Why Should I Use Outsourced A/R, Credit & Collection Management?
Managing accounts receivable (“A/R”) and credit and collections can be an arduous, expensive, even distracting process — especially for small and middle market companies. Key staff is all too often diverted to deal with these issues, taking them away from important strategic management and growth issues.
If your sales and operations employees are also required to approve credit and collect open accounts receivable, you’re underutilizing their true skill sets — and you’re likely spending way too much money to manage these processes. And if you’ve hired professionals specifically to handle your Credit and Collections, you’re likely spending more than $200,000 in additional wages and benefits on these functions. This increased overhead leads to decreased operating leverage and efficiency.
Outsourcing your A/R and credit management to Amerisource is just plain smart. Amerisource can handle both of these business-critical needs, without burdening your existing staff, or your pocketbook! Core outsourcing services provided by Amerisource:
- Accounts Receivable Management & Tracking – Detailed ledgering and tracking of all invoices and posting of account debtor payments.
- Customer Credit Management and Analysis – We will investigate the creditworthiness of your customers and prospects. And we will monitor that credit, track pay trends, and maintain individual credit limits for all of your important customers. So sleep well at night knowing your key credit exposures are being continuously monitored by Amerisource.
- Collection Assistance – Unlimited access to a full staff of courteous and professional collection experts. Experienced professionals monitor status and progress of all open invoices. Detailed collection notes are posted to your account aging on our state-of-the-art ledger, accessible by you online 24 hours a day. Payment or billing issues identified are conveyed to you to assist you in rapid resolution.
What Are Letters of Credit (“L/Cs”) and How Can I Use Them?
This is also often called “Trade Financing for Importers”. If you rely on imported goods to sell to your US or Canada-based customers, Amerisource can help you enhance your relationship and terms with your international suppliers.
Your foreign supplier may ask for pre-payment before goods are shipped (commonly referred to as cash-in-advance, or “CIA”). Your supplier might also ask for payment through a secure instrument such as a Letter of Credit (“L/C”). Amerisource can issue these L/Cs to your suppliers as an add-on product for existing borrowers within specified credit parameters. Amerisource L/Cs are accepted by vendors worldwide.
In essence, this allows an Amerisource client to obtain “inventory financing” from its suppliers. Specific L/C and trade finance structures include:
- Irrevocable Letters of Credit – Amerisource issues an L/C guaranteeing payment to a vendor for a specific shipment once vendor has met all of its obligations to you under the contract or purchase order. While most bank-issued L/Cs require the L/Cs to be cash-secured, Amerisource allows for the accrual of security over time. This allows you to avoid paying your vendor CIA terms, maximizing your working capital and minimizing your transaction risk. Amerisource L/Cs are accepted worldwide.
- Standby Letters Of Credit – Amerisource issues an L/C which remains “open” (on standby) for a pre-specified period of time. This is designed to help you obtain open payment terms with your overseas supplier. Standby L/Cs are typically bound to a sub-limit under your existing credit line with Amerisource.
- Standby Vendor Guaranty – Amerisource issues a guaranty for payment to your supplier, designed to enhance your existing credit relationship. Standby Vendor Guarantees are typically bound to a sub-limit under your existing credit line with Amerisource.
What is a Term Debt Facility and when would I need one?
If you are looking for longer term financing with a fixed payment amortization, then a Term Debt Facility (Term Note) may be a good option for you. Typical uses include seasonal inventory purchases, small equipment purchases, project mobilization, etc. Term Debt Facilities available as an add-on to existing borrowers within specified credit parameters. These facilities are normally secured by inventory, machinery & equipment, real estate and/or other business assets. and are fully customizable based on your needs and qualifications.
