Spongetech Delivery Systems, Inc. (fka SPNGQ)

[loanranger]

(1)"access to a million dollars for a cost of 240k... but you didn't finish the sentence.... they used that million dollars to generate 12 million in revenue...."
I didn't finish the sentence that way because that hasn't been the subject. The subject has simply been the cost of factoring.

(2)"and argueing that invoicing a million dollars a month--ie you sold a million dollars a month in product to generate those invoices-- somehow doesn't add up to a total of 12 million dollars in sales/revenue for the year is not an arguement that you can win... really... it just isnt... "
I never made that argument nor would I. Watch this:
If a company sells 1 million a month in product for 12 months it sells 12 million dollars worth of product.
I'll even go you one better:
A company that has invoices to factor also actually has sales.


People, I had no purpose here other than to TRY to clarify how the cost of factoring might be calculated in given circumstances. At no point did I imply that I thought that factoring was either the cat's friggin meow or a dark omen of impending catastrophe. I was then tempted to compare the cost of factoring to the cost of a cash discount......establishing that they were both methods a company might use to move their cash receipts forward in time and that they both had a cost. Finally, credit card service charges were tossed onto the pile and I pointed out that they are marketing expenses that a retailer in today's markets has no choice but to accept and don't necessarily belong in a discussion of the accounts receivable financing costs of a manufacturer.

If you can somehow find an agenda in this series of posts PLEASE point it out. If you're going to challenge my objectivity I'm entitled to some specifics.

Lastly, per the PR:
"Also, SpongeTech® has entered into a factoring arrangement for its accounts receivable to assist our cash requirements as the Company grows."
This arrangement will add to costs and will not create any incremental revenues, yet at no point have I suggested that it's a bad thing.....to the contrary:
"Using a factor isn't a bad thing......it's just that it can be expensive."
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