April 25th, 2012
Accounts receivable factoring has several advantages over standard bank loans. One of the biggest advantages is that they are more readily available and can be processed much faster. Most clients are approved within 24 hours and funded in 5-7 business days. Approval is based on the strength of the accounts receivable not the business’ credit worthiness or the owner’s personal credit.
Most start-up businesses are not considered credit-worthy simply because they have not been in business long enough to build a credit history. Typical lending institutions, such as banks, have certain guidelines that they must follow in order to lend money, whether to an individual or a company. With a receivables factoring provider they are able to ‘bank’ on the credit-worthiness of the potential client’s customers. If you have some great customers, but have limited cash flow that hamper your efforts to provide goods and services, then you are in a position to avail yourself of the services of a factoring provider. Many businesses are good candidates for invoice factoring; trucking firms, staffing agencies, manufacturers, janitorial services, and service-providers are just a few of the types of firms that can benefit from invoice factoring. Small businesses can realize tremendous value in working with a factoring provider to meet their operating capital needs; purchases, payroll, rent, etc.
Another advantage in working with a factoring firm is that, not only do they deliver cash to keep the business operating, but they can also provide consistent touches with the business’ customers to collect invoice payments. Many receivables factoring companies will assist with the invoicing process.
Factoring the accounts receivable for a business is a quick, efficient, and simple way to enhance the cash flow for the business.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Grow your business, Older Invoices - Factoring Can Help!!, small business, Success in small business, without debt
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April 11th, 2012
Factoring is a financial transaction in which a business sells it accounts receivable to a receivables factoring provider. Factoring is one of the oldest and most respected forms of cash flow and business management tools available. It has been around for several centuries, tracing its roots back to 14th century Europe.
For those not familiar with factoring, the emphasis is on the value of the receivables and the role they play as a company’s asset, rather than the credit-worthiness of the business. What makes factoring so attractive is the fact that there is no loan associated with this form of cash flow management. Often traditional bank loans, when available, can be a long process. Factoring receivables usually provides a 24 hour turn around for funds. Essentially a business ‘sells’ their receivables to acquire the working capital to keep up with the business needs for cash flow. Factoring is not only an alternative for a start-up that has yet to establish a traditional banking relationship, but also for an existing business that has encountered some type of business challenge that has made it difficult for the business to tap into any existing banking relationships.
Factoring is designed for businesses that want to grow their business and do not want to rely on the 30 – 60 day time frame for remittance of customer payments. Do not let the lack of working capital inhibit your business growth and keep you awake at night. Receivables factoring offers financial services that provide cash flow solutions to allow clients to grow their businesses profitably = providing working capital for growing businesses.
Tags: alternate financial products, bootstrap your business to success, cash is king, cash on demand, debt-free, Factoring, Grow your business, Older Invoices - Factoring Can Help!!, small business, Success in small business
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April 5th, 2012
Now, more than ever, it is imperative that you, as a small business owner, are keeping up with the current trends. To ensure success and growth you need to continual push yourself, and consequently your business, to the next level. In today’s fast paced business environment business owners are faced with the choice of forging ahead or falling behind.
Social media refers to the tools that can help you move up in the search engines and is currently all the buzz… LinkedIn, Twitter, Face Book, and don’t forget blogging, have taken the business world by storm. As we have all become more connected, simply having a web site is no longer enough. You have to grow with the trends in social media if you want to grow your business. By including social media tools in your arsenal, you are able to reach your potential consumer virally. That is to say, your connections can help you spread the word about your goods and/or services.
We care about the financial health of our clients and the business community. To that end, we like to not only discuss the financial options that we can offer growing businesses, but also encourage business owners to work smarter, not harder. If you are not utilizing the plethora of social media tools at your fingertips, we encourage you to take a tour of what the web has to offer. LinkedIn, Twitter, Face Book and blog posting services like Word Press, are free and offer the business owner a tremendous return on investment for time spent posting on the web.
Tags: Grow your business, Success in small business
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April 2nd, 2012
Among the top stories in the headlines for 2011 was the realization/appreciation for the small business owner and what they do to help support our economy. In an effort to support small business there has been a rise in lending to growing companies. As the credit crunch tightened lending options for small businesses, more small banks and non-banking institutions stepped in to assist. One of the fastest growing and easiest to work with financers is the accounts receivable factoring lender.
Accounts receivable financers, otherwise known as factors, purchase a company’s accounts receivables, at a discount, in order to provide them with working capital. Factoring provides financing to the business owner in the form of a cash advance (usually 75% – 85% of the purchase price of the invoices).
This form of non-traditional financing works well for small businesses due to the fact that many small business owners have little or no credit history, or need money more quickly than what normal bank processing can accommodate.
It is imperative for the small business owner to keep cash flowing. Whether for making payroll, purchasing supplies, or whatever the day-to-day cash flow need is, a small business must keep cash flowing. It is in the best interest of a business owner, no matter the size of the business, to grow their business without adding debt. Having an accounts receivable financer on the small business owner’s team can only enhance cash flow and provide liquidity that will help the business grow. We at American Funding Solutions provide working capital for growing businesses and are excited to partner with and support small business owners in their efforts to grow their businesses.
Tags: alternate financial products, cash on demand, Factoring, Grow your business, Success in small business
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March 26th, 2012
Invoice or receivables factoring is a tool that will benefit any business or entity which sells goods or services and waits for invoice payment. Factoring is a tool through which businesses can get immediate money from a factoring company by selling their accounts receivable at a discounted rate. The discounted rate charged by a factoring company, is similar, and can be compared to offering your customers a discount to pay your invoice quickly, for example offering your customer payment terms of 2% for payment in 10 days.
Factoring services can be advantageous to various businesses such as staffing companies, janitorial service providers, web designers, etc. Factoring is extremely effective to help small businesses manage their payroll demands. Factoring services can provide cash flow assistance to both product based businesses and service providers. Any firm that needs financial assistance should consider invoices factoring as a way to improve operational cash flow.
Often times start-up businesses, or businesses that have not established a banking relationship, find that they have difficulty obtaining financing through the normal channels. Don’t take “No” for an answer; Get creative!
Factoring is a perfect fit for such businesses. The approval process with a factor is based on the credit worthiness of your business’ customers, not the credit strength of your business. Factoring can often help your business grow and will set the stage for a banking relationship. This is one of the greatest advantages of the receivables factoring industry; offering a creative solution to keep the cash flowing while building business credibility.
Accounts receivable factoring is not necessarily a new idea, but with the economic challenges of our times, factoring is becoming a common solution to improve slow cash flow among business owners. It does not matter whether the company is small or large, start-up or well-established; any business that could benefit from improved cash flow by receiving immediate payment of their invoices should consider receivable factoring as an option.
Tags: alternate financial products, Factoring, Grow your business, small business, Success in small business
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March 23rd, 2012
We have all heard it said many times that CASH IS KING! Well in these uncertain economic times it seems more difficult than usual to get an audience with the ‘king’. My specialty is helping those in business to get a handle on their cash flow challenges. I thought it might be helpful to offer a few hints on improving your cash flow.
1) The foundation of good cash flow practices lies in the ability of the business owner to manage their expenses. You need to consider every expense very carefully. Ask yourself, “Will this really enhance or add value to my business? Do we really need it?” If the answer is, “yes”, then you should ask for a discount, possible try to barter, or negotiate terms on the purchase. Remember, every dollar counts!
2) This is still in line with managing your expenses… budget! You need to make a list of your monthly bills and expenditures. Include on the list the due date of each payment and ensure that you keep to that schedule. This will help in two ways: 1) you can easily track your payments and budget accordingly and 2) helps prevent late fees or overdraft charges, which would add to your liabilities.
3) Review your invoicing/collection strategy to see any areas for improvement. You might consider billing from a ‘due upon receipt’ perspective. You may find that invoicing on a weekly basis, as opposed to monthly, can improve your cash flow. A courtesy phone call is often just enough to speed up a payment. Nothing harsh; “Hello, I just wanted to touch base with you and ensure you had received your invoice.” Something this simple can often move the dialogue along and, in turn, the payment.
4) If you accept credit cards that often improves your cash flow. Some programs feature a payment link right on the emailed invoice. This enables your client/customer to open the invoice, click the link, and have the convenience of paying the invoice and getting it of their ‘to do’ list. In the event you do need to follow up on a slow pay, you then have the added benefit of, “Hey, I can take your credit card payment over the phone, if that would make it easier for you.”
5) Factoring your invoices can certainly help with the cash flow. Many small businesses serve larger businesses that routinely take 60 – 90 days to pay. A medium to small business doesn’t have the luxury of reserves that keep cash flowing during that payment period. Factoring can instantly improve your cash flow, providing money for monthly expenses, payroll, vendor discounts, and generally making it easier to stay on top of your monthly budget.
Remember, we are all in business to do what we are passionate about. No one likes to worry with cash flow. I hope that you find some of my hints helpful and know that I am always here to partner with you to help with your cash flow pain points.
Tags: alternate financial products, cash is king, Factoring, Grow your business, small business, Success in small business
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March 19th, 2012
I recently read a funny quote, “As a small business owner, I sleep like a baby. I go to bed at 8 PM and wake up at midnight screaming.” I don’t know who said that, but I can relate, and I bet I’m not the only one. Here is a list of some of the ‘buttons’ that cause entrepreneurs sleepless nights.
1) Cash flow – We all know that ‘Cash is King’. Most small businesses that go out of business do so because of one little issue; they ran out of cash. If you cannot keep the cash flowing then you will struggle to keep the business open, much less growing. In order to keep track of your cash flow you will need to educate yourself on how to read a cash flow statement. Keep an eye on, and consistently review the things that affect your cash flow.
2) Help in slow cash flow periods – There are options to help if you find that your cash flow is not keeping up with business. If you hit a rough spot, there are financial alternatives such as factoring receivables. By factoring your receivables you can have funds readily available for keeping the cash flowing and your business growing.
3) Generating revenue – it is essential for the well being of your business, to implement a method that consistently creates customers for your goods or services. Networking, social media, marketing and advertising are just a few of the tools that need to be in your revenue generating arsenal. It is imperative that you turn prospects into customers, customers into fans, and fans into loyal referral sources.
4) Billing your clients – how many times have you awakened in the middle of the night with the realization that you forgot to invoice your client/customer? It is necessary to implement a method that will allow you to regularly bill your clients. If you are not collecting at the time of service, you need to establish a practice of billing at specific intervals. I find it works for me to invoice my clients on the 15th and 30th of every month. I simply put a recurring reminder on my calendar to review my client list for invoicing twice a month.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Grow your business, success, Success in small business
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March 13th, 2012
Unfortunately, in our sluggish economy, slow paying customers have become more the norm than ever before. Like it or not, slow payments seem to be here to stay. As a rule, commercial clients take 45 – 90 days to pay their outstanding invoices. For many small to medium sized businesses this is a crippling financial reality, especially if that business is in the start up or growth phase of building the business.
Most often, when faced with a cash flow short fall, the business owner will go to their local bank to apply for a business loan. Banks are a great resource for the business owner but, when the business is new or has not established their credit worthiness, they will find that the application for funds will likely be rejected. There are alternatives to the normal banking resources. Many start-up businesses are not familiar with alternative lenders providing accounts receivable factoring.
If an entrepreneur finds themselves in a cash flow crunch and cannot wait the 45 – 90 days to receive payment from customers, there is a solution. Accounts receivable factoring eliminates the inconvenience of waiting an extended period of time for payment. Factoring provides the business owner with the cash flow to meet overhead needs, pay employees, and generally keep the business growing and moving forward.
Accounts receivable factoring can be easily integrated into any business model, allowing the business owner to receive funds, usually within 24 hours. It is easy to qualify for, as the business is ‘banking’ on the credit worthiness of their customers. Once a business has established their own credit worthiness they can establish a financial relationship with a local banker, but, in the interim, factoring can buy them the time they need to build their business’ financial reputation.
Tags: alternate financial products, bootstrap your business to success, Factoring, Grow your business, Success in small business
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February 23rd, 2012
The greatest benefit of using a factoring firm is often that a new small or medium sized business doesn’t have the line of credit that commands the attention of regular streams of financing options. If a company hasn’t been around long enough to establish a financial relationship with a bank, then an invoice factoring company can help address the need for cash flow. The start-up may have credit worthy clients and healthy accounts receivable, but find that they are ineligible for most bank loans. In the event that a business needs immediate liquidity, they can avail themselves of the services of an invoice factoring company.
New businesses with a high demand for their products and/or in the position of rapid growth often face financial challenges. Purchasing additional materials and supplies, making payroll, etc. cause a cash crisis if cash is tied up in lengthy invoice receivables. Invoice factoring can offer funds within 24 – 48 hours instead of the 30 – 60 days. The main thing that ALL businesses must focus on is CASH FLOW. Keep your cash flowing and your business growing … be flexible and open to financial options available to business owners.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Grow your business, small business, Success in small business
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February 15th, 2012
In a recent report out from Dun and Bradstreet, the credit reporting agency disclosed the trend is up for businesses taking more than 90 days to settle their payables. In December, the number of invoices outstanding for greater than 90 days had increased by 20%. Oddly enough, smaller firms are actually settling their accounts more rapidly than their larger counterparts. Businesses with 5-20 employees took an average of 50 days to pay, while companies with more than 500 employees took 60 days or more.
Small businesses generally have more cash flow challenges and, as a result, need a way to address this receivables shortfall. One valuable tool for the small to medium-sized business with cash flow pains is the use of receivables factoring, also called debt factoring.
When a small business factors their receivables, they receive an advance on their outstanding invoices to obtain working capital. As we all know, cash flow is the life blood of any business; large or small. Slow payments can seriously hamper the cash flow of a business, crippling the business. As long as larger companies drag out their remittance process small businesses will need to be creative in the way they approach their cash flow issues. We at American Funding Solutions offer a variety of financial options to help the small to medium business keep their cash flowing, enabling them to make payroll, receive vendor discounts, purchase supplies, etc.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Success in small business
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