N.C. Bank Serves Up Online Factoring

When Crescent State Bank, Cary, N.C., found its business customers clamoring for an alternative financing solution, it turned to eRev, an Internet-based application from Atlanta-based eRevenue, Inc. The $108 million community bank recently began offering eRev to its business customers, satisfying Crescent State's need for up-to-the-minute, real-time transaction-based financing.

Companies that have accounts payable on a weekly basis and accounts receivable on a monthly or 45-day basis-such as staffing agencies, trucking companies, and distributors-can especially benefit from the service, since it irons out potential cash flow problems.

eRev enables Crescent State to manage the accounts receivable of its business clients from start to finish, beginning with sending out invoices and ending with receiving payments.

As an integral part of this process, the business clients also receive a short-term loan against a portion of the amount of each invoice.

"We're promoting this to customers who might not qualify for general lines of credit," said Mike Carlton, president of Crescent State Bank. "We're looking at this as alternative financing."

With eRev, the bank's business client sends its invoices electronically to the bank. After verifying that the invoice is valid, eRev sends it out for payment, and the bank's client receives an advance-typically 80% of the total invoice.

When the bank receives payment for the invoice, it deducts the advance, plus a discount fee of 2% to 5% for each transaction and interest on the money that was loaned.

"This allows a company to grow and mature faster," said Tom Holder, senior vice president and senior lender at Crescent State Bank. "It gives them access to more working capital."

The community served by Crescent State's four branches is a technology-driven, high net worth area on the outskirts of North Carolina's Research Triangle. When the bank opened in 1999, it hit the ground running with its Internet banking options and other cutting-edge technologies. eRev is a continuation of this strategy.

In the end, eRev is beneficial both for the bank and its clients. The bank gains a steady stream of fee-based income, with no up-front investment in equipment and only minimal staffing requirements.

For the bank's clients, eRev means that companies that might not otherwise have access to the capital they need have an expanded line of credit as well as a way to outsource their accounts receivable work.

"It's another arrow in their quiver," said Holder. "It helps growing companies get where they need to get much faster."