People Search $100 Million a Year. This Desk Starts at $20 Million a Month
Annual billings are not the facility. Convert billings through DSO and the advance rate or you will shop the wrong desk. Talk to PeerSense.
People search $100 million a year. Public floor on this desk is $20 million a month, $240 million a year. That is not a $240 million facility. Outstanding receivables equal monthly billings times DSO divided by 30. At 60 day terms that book is about $40 million outstanding. An 85 percent advance funds about $34 million before concentration caps and dilution reserves. Talk to PeerSense.
Is $240 million a year in receivables a $240 million factoring facility?
No. Three numbers get treated as one and they are not the same.
Annual billings are what you invoice in a year. Outstanding receivables are what is unpaid right now. The facility is what a funder will advance against the eligible slice of that outstanding book.
$240 million a year is $20 million a month. If customers pay in 60 days you are carrying two months of invoices, about $40 million. The funder does not buy the year. It advances against the eligible unpaid invoices.
A $100 million a year search is $8.3 million a month. That sits. This desk starts at $20 million a month.
The conversion on a $240 million book
Use this on every file. Outstanding equals annual billings divided by 365 times DSO. Funded facility equals outstanding times the advance rate on eligible receivables.
30 day DSO. About $20 million outstanding. About $17 million funded at 85 percent. About $18 million funded at 90 percent.
45 day DSO. About $30 million outstanding. About $25.5 million funded at 85 percent. About $27 million funded at 90 percent.
60 day DSO. About $40 million outstanding. About $34 million funded at 85 percent. About $36 million funded at 90 percent.
90 day DSO. About $59 million outstanding. About $50 million funded at 85 percent. About $53 million funded at 90 percent.
A manufacturer on 60 day terms with $240 million of annual billings is a $34 million facility, not a $240 million facility.
Why the funded number is smaller than the math
The advance rate is applied to eligible receivables, not to the gross AR balance.
One customer over the concentration cap comes out. Invoices past the eligible aging come out. Disputed invoices come out. Historical dilution gets reserved. Cross aging can knock out a whole account if one invoice is past due.
That is why two companies with the same annual billings get two different facilities. The DSO math sets the ceiling. Eligibility sets the check.
Where this book actually sits
Small ticket factors price per invoice and live well under this size. A $34 million funded book is institutional receivables finance.
If annual billings are $240 million and DSO is 60, start the conversation at a $34 million facility and bring the customer list, aging, and dilution history. That package decides rate and structure. The year number does not.
Talk to PeerSense. Share annual billings, DSO, top customer concentration, and current facility if you have one.
Talk to PeerSense
Send annual billings, DSO, and top customer mix. Floor is $20 million a month in B2B invoices.
Receivables facility sizing: The desk will reach out. No obligation.
Questions About This Topic
Is $240 million a year in receivables a $240 million factoring facility?+
No. At 60 day DSO a $240 million annual book is about $40 million outstanding and about $34 million funded at an 85 percent advance, before eligibility haircuts. Talk to PeerSense.
How do you convert annual receivables to a factoring facility size?+
Outstanding equals annual billings divided by 365 times DSO. Facility equals outstanding times the advance rate on eligible receivables. On $240 million at 60 days and 85 percent that is about $34 million.
What DSO should I use if terms are net 60?+
Start at 60 days and then use your real collections history. If customers pay in 72 days, size at 72. Stated terms are not DSO.
What is the factoring floor on this desk?+
Standard factoring from $20 million a month in B2B invoices. People search $100 million a year. That is $8.3 million a month. That sits. Talk to PeerSense.
Editorial integrity: Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. PeerSense sources capital through a curated network of commercial lenders and capital sources. Content is for educational purposes and does not constitute financial, legal, or tax advice. Rates and terms cited reflect market conditions at the published date and may not match current quotes. Consult a qualified professional for transaction specific guidance.