OVERVIEW
Factoring is a saving grace for many apparel, textile, accessory, shoe, home furnishing and furniture manufacturers and importers.
While there is little we can do to influence the economy or shopping trends, Milberg can certainly help reduce credit risk.
How Importers and Manufacturers Can Navigate a Difficult Retail Environment
“Factoring is as much about the ability to get credit coverage as it is about borrowing capacity,” says Daniel Milberg, President of Milberg Factors, Inc., a leading privately held firm focused on factoring and commercial finance. The problem is that many business owners, chief financial officers and other professionals still do not know that the best credit underwriters are factoring companies. “We are seeing many importers and manufacturers who are new to factoring, because credit protecting one’s receivables is of the utmost importance. There is a misconception that if you come to a factor, you are there simply to find a working capital solution, when in reality, that might not be the case,” adds Milberg. “We have many universally well-known importers and manufacturers that do not borrow a nickel from us, but come to Milberg simply because they want credit coverage.”
Credit coverage is key as hardly a day passes when you don’t hear about another retailer downsizing or shutting its doors. Sears, once the largest retailer in the U.S., announced another set of store closings. This year, Gordmon’s and Rue 21 filed for bankruptcy. The Gymboree Corporation is set to close approximately 350 locations as it works to restructure in Chapter 11 bankruptcy. The Limited, American Apparel and Wet Seal have all hung permanent “Closed” signs on their doors.
According to Bloomberg, “Retailers are filing for bankruptcy at a record rate as they try to cope with the rapid acceleration of online shopping.”* Moody’s credits those riches to rags stories to reduced consumer spending: “Apparel and footwear sellers, on the other hand, will be squeezed as consumers continue to spend more on healthcare, rent, home-related products, electronics and cars…” **Add the increasing influence of “fast” fashion from Europe, and the garment industry is hit with a seemingly unending series of challenges.
As a factor, Milberg acts as your credit collections and accounts receivable departments by conducting credit analyses, setting limits on credit exposure, collecting accounts receivable, and recording accounts receivable transactions.
Factoring is a saving grace for many apparel, textile, accessory, shoe, home furnishing and furniture manufacturers and importers. Since the early 1900s, garment and textile companies in the U.S. have used factoring as a way to mitigate credit risk. “Factoring serves a wide range of solutions that can be customized to their specific needs, timeframe and budget.” says Milberg. Providing credit protection has always been part of any factoring program. In a typical factoring relationship, the client outsources the management of their accounts receivables and protects against credit losses. As a factor, Milberg acts as your credit, collections and accounts receivable departments by conducting credit analyses, setting limits on credit exposure, collecting accounts receivable, and recording accounts receivable transactions. By “approving” a particular account receivable, Milberg agrees to absorb potential credit losses on that account. That takes the risk off the client’s plate and allows them to focus on building their core business.
Says Milberg, “While there is little we can do to influence the economy or shopping trends, we can certainly help reduce credit risk.”
Contact
For more information about Milberg Factors, Inc., please contact Dan Milberg at info@milbergfactors.com, or call (212) 697-4200.
