The problem is that Berman can't factor past receivables because of their age. A factor would also want to look at all receivables and the terms of the invoices to determine the likelihood of collecting them. As a credit manager in a past life, I was tasked with doing this for an employer who needed the money quickly to grow their business.
Typically , a factor would offer 80% for receivables they knew that could be collected but major customers would be called ahead of time to confirm terms were what the invoices said. As I have said many times here, I don't think the terms for the product are what many think they are , certainly not N30, N60, N90 or N120 days. There is a good reason why A/R is so high, DSO is so high, and cash collected on the A/R is so low. I've told you my thoughts why so no need to repeat.
If cash flow was so good why does SB still need to loan the company the money?. Why does he have to accrue expenses and pay some of those expenses in shares?
I know everyone knows the answer. Factors won't touch On4 receivables at this point in time.
Typically , a factor would offer 80% for receivables they knew that could be collected but major customers would be called ahead of time to confirm terms were what the invoices said. As I have said many times here, I don't think the terms for the product are what many think they are , certainly not N30, N60, N90 or N120 days. There is a good reason why A/R is so high, DSO is so high, and cash collected on the A/R is so low. I've told you my thoughts why so no need to repeat.
If cash flow was so good why does SB still need to loan the company the money?. Why does he have to accrue expenses and pay some of those expenses in shares?
I know everyone knows the answer. Factors won't touch On4 receivables at this point in time.
Quote:If you look at a previous post I made - if I were Berman I would Factor/Sell my receivables to a third party and turn it to cash now. He can't focus on collecting AR if he is on the road selling this tech. There are issue with Factoring but in this case he needs the cash to make all the other things work. It would make ONCI immediately cash flow rich - he can get thru the problems with Delaware and have enough cash to expand ONCI and buy the 6th leg - CASH. NO DEBT.
