In the aftermath of a catastrophic weather event, storm restoration crews are often summoned from great distances to aid in the recovery work. However, keeping crews on the road for days or even weeks at a time is incredibly expensive.
Everything must be covered out of pocket, including fuel bills, accommodations, and a hundred other unexpected expenses that arise every day. As a result, by the time they return home, storm restoration companies are often scraping the bottom of the working capital barrel. Yet they still need to pay staff, perform equipment maintenance and maintain readiness.
But how do they do that without cash? Many seek assistance from invoice factoring companies like Blue Elephant Financing. But this may not be the wisest of choices and below we’ll explain why.
What is Blue Elephant Financing?
Blue Elephant Financing is a relatively new company (founded in 2013) that offers creative financing options to companies that provide restoration services to regions impacted by natural disasters.
Their primary focus is invoice factoring and they market themselves fairly aggressively to small and mid-sized companies that might otherwise have difficulty obtaining bridge financing to get them through periods of negative cash flow.
How Does Blue Elephant Financing Work?
Blue Elephant Financing works by purchasing unpaid invoices from storm restoration and disaster mitigation companies, thereby providing them with much-needed working capital. This process, called "invoice factoring," has been around in one form or another for centuries but has just as much potential downside as it has upside.
Blue Elephant Rates and Fees
In what is not typically a great sign, Blue Elephant capital makes no mention of their rates and fees on their website. In order to discover the cost of doing business with Blue Elephant, you must fill out and submit their online application. Once you do, a representative of the company contacts you and asks a slew of questions regarding:
- The size of your company
- The number of employees
- Your annual revenue
- How long you’ve been in business
- The outstanding invoices you wish to factor
If the representative determines that you may qualify for Blue Elephant invoice factoring, they'll ask for more personal information, including your SSN so that they can run a hard pull credit check on you.
Once the credit check is complete, they’ill either reject your application or make you a financing offer. The exact rates and fees involved will depend primarily on the financial health of your company and your own personal credit rating. Although the creditworthiness of the entity holding your unpaid invoices will also be taken into consideration.
Unlike with Payost invoice financing, however, a AAA credit rated customer is not by itself enough to convince Blue Elephant to offer you invoice factoring. You must also have a credit rating of 550 or higher, your company must be in business for at least 1 year, and they prioritize aid to restoration companies that work with FEMA and other government agencies.
In a best-case scenario, Blue Elephant may offer to fund 85 to 90% of your outstanding invoices. In most cases, however, particularly if you have less than perfect credit or your company is relatively new,that funding rate will be considerably lower.
In addition, you’ll be charged a fee for every week the invoice remains unpaid. And should the invoice wind up not performing, you’ll be required to purchase it back from Blue Elephant at very favorable terms to them.
Blue Elephant Pros and Cons
Being a relatively new financing entity, the Blue Elephant track record isn’t substantial enough to state categorically that they are either a blessing or a curse.
Chances are, like most invoice factoring companies, they occupy a middle ground. And whether working with them winds up being a net benefit or a net liability depends mostly on whether you employ their services wisely or in a haphazard fashion. All that said, the big picture pros and cons of Blue Elephant Financing are:
- They provide nationwide coverage
- They provide fairly quick credit decisions
- Their funding limit is $10 million
- They can accommodate government pay schedules
- A lack of transparency
- Often punishing rates and fees
- They perform a hard pull credit check
- They purchase invoices outright
- They practice recourse factoring
- They prefer government contractors
While it’s nice that Blue Elephant capital can offer up to $10 million in factoring relief for cash strapped companies, owners should not be blinded by the impressive numbers. The fact is, in most cases, companies seeking help from the likes of Blue Elephant are not large, well-heeled companies experiencing a temporary glitch in their cash flow.
They’re smaller, companies trying to survive. As such, they’re not going to be offered $10 million. Nor will they be offered favorable repayment terms, funding rates or ancillary fee schedules.
If such companies have unpaid invoices being held by AAA credit rated entities, they would be far better off choosing Payost invoice financing. And we'll get to why in a moment.
“All that matters in business is that you get it right once.” — Mark Cuban
Blue Elephant Financing vs. Payost
Like many invoice factoring companies, Blue Elephant can serve an important service if used in a limited fashion by companies with outstanding credit and generally robust revenue. For newer companies simply trying to survive periods of negative cash flow and make it to the next job, Blue Elephant-type invoice factoring may wind up being more hindrance than help.
On the other hand, those same companies may wind up thriving if they have unpaid invoices being held by AAA credit-rated companies and they choose Payost invoice financing instead.
Payost invoice financing is far and away the better choice for such companies and one that will actually enable growth rather than hindering it. That's because at Payost:
- We don’t perform a credit check
- We don’t play favorites with government contractors
- We pay your invoice instead of purchasing it
- We base our funding decisions on the creditworthiness of your customer
- We never force you to repurchase non-performing invoices
- Our application process takes less than 5 minutes
Are Blue Elephant Financing Reviews Good?
Blue Elephant reviews tend to be mixed, although they get generally good marks in terms of customer support.
Bottom Line: Should you try Blue Elephant Financing?
With its limited acceptance requirements, you should only try Blue Elephant Financing if you have no other choices and if you meet their lofty requirements. But if you have unpaid invoices being held by AAA credit-rated companies, you should definitely try Payost invoice financing. Payost is the smart alternative to:
- Bank loans
- SBA loans
- Lines of credit
- Invoice factoring
- Merchant cash advances
- And other forms of advance funding
Not only that but the Payost model will work for any type of business that has unpaid invoices held by any AAA credit rated company. So don’t delay and apply for Payost invoice financing today and leave the factoring blues behind!