How We Work

Federal National’s Funding Lines function as revolving facilities. They are easier to use and more flexible than many lines of credit. Following is an example of how Federal National works with High-Tech Company, a fictitious software and communications engineering company which serves large corporations and government entities.

High-Tech performs its services and bills its customers specifying payment in care of Federal National on the invoices. Federal National is copied by Fax.

High-Tech notifies its customers that Federal National is its new financing provider and Federal National notifies the customers that High-Tech has assigned its accounts receivable to Federal National, requesting that the receivables be paid directly to Federal National. This is a commonplace form of finance that does not trouble High-Tech’s customers.

Federal National advances by wire transfer 85% of High-Tech’s invoice amounts (90% for its invoices to federal government customers) to High-Tech’s bank account, usually the business day after High-Tech creates its invoices.

Referencing the faxed invoices, Federal National’s staff verifies that High-Tech’s customers received their bills, the invoices are in good order, and the billings are unchallenged.

Invoices are paid to Federal National. Federal National reconciles these payments every day with a wire the next business day to High-Tech for its balance less the 85% or 90% advance High-Tech has already received and less Federal National’s fees.

Once the Funding Line is set up, High-Tech can, based on its needs, choose which if any of its invoices to finance and when to finance them. Invoices not financed are forwarded immediately to High-Tech when they are paid and do not incur financing charges.

On the day of each wire, High-Tech receives a detailed confirmation for each invoice advance or settlement payment. At the end of the month, Federal National also provides detailed transaction statements for the period and an aging report showing all invoices that High-Tech has outstanding with Federal National by contract and customer.