Payost is the Superior Choice to Invoice Factoring
When we decided to start Payost, we wanted to create something that was just as simple as invoice factoring (if not simpler) and just as fast if not faster. However, we wanted it to not leave a blot on the reputation of our clients the way factoring can.
To do so, we took a fresh look at the contractor/utility relationship and devised a model that leverages the creditworthiness of the utility to facilitate invoice financing.
As a result, we’re able to offer storm restoration companies a way to free themselves from bondage to the Accounts Payable department and instill order and predictability into their cash flow. Below we will look at the ways our invoice financing model is superior to standard invoice factoring.
About the Payost Model
Storm restoration companies know that their biggest challenge is not navigating storm -ravaged communities to get to the work site. It’s navigating cash flow issues created by a 90 and, in some cases, 120-day wait for payment. We created Payost to address this specific issue.
Whereas invoice factoring companies will provide you with business capital to get you over the hump they do so by purchasing your invoices. Once they do, you must inform the utility they’re now the holder of that invoice. This might not seem like a big deal but it sends the wrong message to the utility.
Even if your company is basically sound, the message the utility will take away is that you’re in trouble. This may prompt them to call someone else next time. With Payost invoice financing, the utility never learns of your relationship with us.
That’s because we don’t purchase your invoices. We simply pay them while the utility continues to pay you in the normal manner.
Like all great ideas, the Payost model of leveraging the creditworthiness of the utility is simple. It bypasses the countless barriers built by banks and other traditional financial institutions and it doesn’t result in a negative status next to your name like invoice factoring can.
Why Work With Payost?
There are numerous reasons why you should work with Payost instead of a bank or an invoice factoring company. Here are just a few:
- We never conduct a credit check on you or your company
- The application process typically takes less than 5 minutes
- If you possess valid invoices from a utility or other AAA credit-rated company, we can help you
- Approval is fast and money can be disbursed to you in one or two business days—not weeks
- There are no insufferable monthly payments to dread
- The utility will never learn from us that you have used Payost
- You get the capital you need now to facilitate growth.
Payost allows you to pay off your subcontractors and keep them in the fold, conduct the necessary maintenance and upgrades of equipment as well as be ready to hit the road at a moment’s notice when called upon.
"What can be added to the happiness of a man who is in health and out of debt?" - Adam Smith
Is Payost Better Than Factoring?
Until recently, invoice factoring was considered something of the gold standard when it came to advance funding.
But not anymore. Payost has proven itself an easier, faster, and less impactful way of obtaining advance payment on your outstanding invoices. That’s because:
- Contrary to popular belief, factoring services conduct credit checks. We don’t.
- Our model is simple and doesn’t require 3rd party intervention.
- Approval depends entirely on the creditworthiness of the company holding your invoices.
- Factoring typically takes a larger bite out of your invoice than Payost does.
- Factoring can leave an unfavorable streak on your reputation that can be hard to shake. We don’t.
How Payost Works
When storm restoration companies go out of business, it’s almost always a direct result of cash flow problems. Payost was designed to address this specific issue. Here’s how it works:
- You perform storm restoration work for a AAA credit-rated utility.
- Your invoice for that work is signed off by the utility.
- You contact Payost with the details of your situation.
- Payost verifies your invoices and pays them off.
- You’re able to pay employees and subcontractors and keep them in the fold.
- When the utility finally pays the invoice, you reimburse us and add a modest fee.
That’s it. The utility never finds out. There’s no credit check and you don’t have to offer any of your valuable equipment as collateral. In addition, your credit history is not affected.
How Does Invoice Factoring Work?
Invoice factoring works by providing a cash advance on your outstanding invoices. The company holding the invoice is notified that ownership has shifted to the factoring company and that payment should be made to them.
If you have a relatively modest amount due you from a utility (say $50,000), the factoring fee you’d be paying could run as high as 6.5% ($3,250). That’s a substantial bite.
In addition, if you fail to inform the utility that you sold the invoice to the factoring company and payment comes to you, you’ll be hit with another fee by the factoring company for the error.
Why Do Companies Use Invoice Factoring?
Companies use invoice factoring because it doesn’t affect their credit rating and because, until now, there have been few alternatives to choose from. It’s also a known quantity as this type of advance funding on money due has been in use for centuries throughout the world.
In the storm restoration business, where cash flow is king and you need to be ready to leap into action at a moment’s notice, factoring has been widely used.
However, because of the size of the fees charged and because it can shine an unflattering light on a company, it would be inaccurate to just call it “popular.”
What About Bluevine?
Bluevine is a type of invoice factoring company that has been receiving a fair amount of press lately for both good and bad reasons.
Some of that press is a result of their own marketing campaign which is designed to show them in the best possible light. In other cases, however, the company has been taken to task for the outrageous fees they charge for their lines of credit.
Why Work With Bluevine?
Up to now, storm restoration companies have worked with Bluevine mostly because they had few, if any, other viable alternatives. They needed access to business capital to stay afloat and Bluevine offered them a way to obtain it using outstanding invoices.
But with Payost now in the game, there’s no reason for anyone to have to endure the potential damage to their reputation that working with a factoring company can produce. “What damage,” you say?
Bluevine, like other factoring services, purchases your outstanding invoices. As such, you need to inform the invoice holder (the utility) of the change of ownership. The utility likely won’t say anything to you but behind the scenes, they’re going to start worrying that if you’re having cash flow problems, you may be less than reliable going forward which could be damaging to your business.
What Are the Bluevine Terms?
Bluevine allows companies to receive an advance of up to $2 million on their invoices. The company will provide immediate cash worth 85% of the value of qualifying invoices. You’ll also need to inform the invoice holder that you’ve transferred ownership to Bluevine.
When the utility pays off the invoice, Bluevine will deduct their fee from the remaining 15% and then refund you the balance.
“Finance is wholly different from the rest of the economy” - Alan Greenspan
How Does Payost Fund?
Payost provides you cash for unpaid invoices you have with any AAA credit-rated utility or other company. Approval is fast and, unlike with factoring companies like Bluevine, there’s no credit check required.
Payost does not float you a line of credit or issue business loans. There’s also no need to inform the utility you’re working with Payost because Payost doesn’t purchase your invoice. When the utility pays off the invoice, you repay Payost, plus a modest fee for their service.
Does Payost Actually Work?
If you own a storm restoration company, you know every day on the road can cost thousands of dollars. In addition, once you return to base you’re forced to wait 90 to 120 days before you’re paid for the valuable services you provided. Yet at the same time, your working capital is depleted and subcontractors are clamoring to be paid.
Payost is the fastest, simplest, most cost-effective way to obtain cash for your unpaid invoices. You’ll get the money you need to make payroll, maintain and update equipment as well as keep subcontractors happy and in the fold.
When compared to invoice factoring companies like Bluevine, the Payost process is a walk in the park. Whereas Bluevine conducts a credit check, we don’t.
While Bluevine withholds 15% of your invoice value, we don’t. And while working with Bluevine can paint you in an unflattering light with the utility, the utility never has to learn you’re working with Payost.
Are There Downsides to Using Payost?
There are no downsides to the Payost model itself. As we said, it doesn’t affect your credit score, doesn’t require monthly payments, provides cash when you need it for a reasonable fee, and the entire transaction is completely discreet.
The only “downer” would be if you had no unpaid invoices being held by a AAA credit-rated company. In that case, you wouldn’t qualify for the Payost service.
Where Can I Apply for Payost?
You can apply for Payost by going to our “Apply Now” page and filling out the short application there. Before you do, make sure you are in possession of the following:
- Your company name
- The name of the utility holding your invoices
- You can also use the name of the general contractor who has billed a utility for your services
- Confirmation that the work you performed has been signed off for
- A copy of the invoice being held by the utility or submitted to the utility for your services
Once you have those things, applying is easy. If approved, you’ll be provided an online dashboard where you can upload qualifying invoices.
Bottom Line: Should you try Payost?
Tired of jumping through hoops at the bank to get bridge loans? Or don’t want to get charged the outrageous fees by factoring companies like Bluevine? Or maybe you’re tired of the hits your reputation is taking every time you use a factoring company?
If you can relate to all of those and want your business to stay, then Payost is the only invoice financing company you should be using.
No other type of accounts receivable financing is as simple, as fast, as cost-effective or as hassle-free. Our innovative model lets you bypass the downside of advance funding and enjoy the upside so don’t delay! If you have unpaid invoices being held by a utility or you need money to bridge the cash flow gap, go to our Apply Now page and set the ball rolling toward sustainable growth!