Posts Tagged ‘cash is king’
Thursday, February 2nd, 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.
Tags: alternate financial products, cash is king, Factoring, Success in small business
Posted in Business Management, Cash flow, Factoring | No Comments »
Monday, August 29th, 2011
When considering if factoring is right for your business, a question that often arises is if there is a specific criteria for determining invoices that are eligible for purchase from the factoring provider. That is a pretty easy question to answer… common sense is a good guide for this one. If the goods were delivered to/received by your customer and/or the services were performed, then those invoices are eligible for purchase.
There is one additional proviso and that is simply, your customers must be creditworthy. There is some due diligence on our part in determining this last stipulation, but presumably, you would not be doing business with customers that could not pay you.
Tags: alternate financial products, bootstrap your business to success, cash is king, debt-free, Factoring, Grow your business, Older Invoices - Factoring Can Help!!, small business, Success in small business, without debt
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Friday, August 26th, 2011
Since this is a blog dedicated to factoring, I thought it might be helpful if I tackled some of the frequently asked questions that we encounter in our day to day business. I believe the basis of a lot of questions that arise are due in large part to the fact that factoring is a little understood business financial tool. Probably the most popular question has to do with whether or not factoring is a good fit for a client’s business.
Let me first reassure you that factoring is an excellent fit for most businesses. I don’t know of a business in operation that does not have a need for working capital. The problems arise when a business does not have working relationship with a bank… or for any number of reasons, cannot qualify for a bank loan or line of credit. It is a fact that it is easiest to get credit when you don’t need it. First let me set the record straight, in the factoring relationship, you are not a borrower, and we are not a lender. We purchase your accounts receivables, that is called factoring. We purchase receivables for goods delivered or services rendered.
Once our business relationship is established you, our client, simply deliver your invoices to us. We offer as much or as little support in the billing process as you are in need of. Normally, you will have your advance within 24 hours. Then, once your customer remits payment we pay you the received amount less your advance and our fee. It is a very simple process and one that provides the working capital necessary to grow your business.
Please feel free to comment or ask questions. We are eager to assist you with your business financial needs.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Grow your business, Older Invoices - Factoring Can Help!!, Success in small business, without debt
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Monday, August 15th, 2011
As you recall we talked about staying on top of your accounts receivable. It is just as important to maintain control of your debt.
Many businesses fail because they take on a huge burden of debt in the early days of their start-up. Once that tone is set, they often continue to struggle to make ends meet.
Keep everything as lean as possible in the early days of your business. Keep an eye on unnecessary costs and ensure that you are moving money back into your business, rather than racking up debts. Many business advisers suggest start-ups look to family and friends for start-up capital, or resources to keep you afloat during lean times. If these resources are not available to you, then you may consider bootstrapping your business. Our firm also offers financial alternatives and we would be happy to visit with you about your options.
Tags: alternate financial products, bootstrap your business to success, cash is king, Grow your business, Older Invoices - Factoring Can Help!!, Success in small business
Posted in Business Management, Cash flow, Factoring, Growing your business, New Business | No Comments »
Friday, August 12th, 2011
With the stock market falling, consumers who are holding tightly to their cash, and the bleak outlook for our economy it would seem that small business is a rocky venture to pursue. But… the latest turmoil in the financial markets should NOT cause small businesses and start-ups to panic. There are some positive factors in the numbers that are being reported by those with an eye to small business (be it payroll numbers up, or unemployment numbers down). The important thing to remember is that you cannot control what is happening around you, but you can control your business model. I think it is of value to go over some fatal mistakes that, if avoided, can only help your bottom line.
#1 Late Payment Complacency – I put this at the top of the list because cash flow is critical to your business survival. Dun and Bradstreet reports that 2/3 of businesses take over 30 days to pay invoices. With the economy looking bleak, those holding the purse strings are likely to clench… but don’t be afraid to move cash flow along. If you are owed money, then it is in your best interest to set clear payment terms and make follow up calls if those terms aren’t adhered to. Good customers won’t refuse to continue doing business with you because you are requesting what is owed you. The ones that choose to be offended and take their business elsewhere are those that eat away at your cash flow… probably not the best customers to have anyway.
What do you think? I will post more of my ideas on maintaining good cash flow procedures. If you have comments I welcome your thoughts and suggestions.
Tags: cash is king, Grow your business, small business, Success in small business
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Thursday, June 30th, 2011
We all know that times are tough, business is in a terrible slump. As you know we specialize in tools to help the small business owner get the alternate financing they need.
Here is an interesting article that supports the need for alternate financial options for the small business owner.
Smaller Businesses Seeking Loans Still Come Up Empty.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Grow your business, small business, Success in small business, without debt
Posted in Business Management, Cash flow, Factoring, Growing your business, New Business | No Comments »
Tuesday, June 7th, 2011
In a recent article that appeared in the June, 2011, Costco Connection, Don Sadler provided some terrific information on the factoring industry. He cited a Washington Monthly article in which Jeffrey Leonard, CEO of the Global Environment Fund, stated that, “Typically, small businesses lead the way out of recession…” Mr Leonard explained that the reason we are not seeing that this time is due to the fact that small businesses are experiencing cash flow problems.
“Many large companies today have simply announced that as a matter of policy they will be paying their bills late – sometimes as much as four months late,” Leonard noted. This policy results in small businesses essentially making “free loans” to their customers – rendering their working capital unavailable.
Mr. Sadler cited a couple of options that are available to the small business owner: optimizing cash flow and factoring. Sadler quoted Tracy Eden, national marketing director for the Commercial Finance Group, “Factoring is a creative financing solution for businesses that don’t qualify for traditional bank loans but need a financial boost to help manage their cash-flow cycle.”
Factoring allows businesses to sell their outstanding invoices to a finance company, known as the factor, at a discount. According to Ryan, “Instead of waiting up to 90 days or longer to get paid, the business receives most of the cash – typically 70 – 90 percent of the receivable – when the invoice is generated.” When the factor collects the invoice the small business will receive the balance, less the discount.
This scenario is a win – win situation in that the small business can maintain cash flow, allowing them to make payroll, purchase supplies, or whatever they need to focus their working capital on as well as keeping their customers happy and maintaining a positive relationship.
If you would like additional information you can contact our office to see how factoring might be a great option for you to keep your cash flowing during these unsettled economic times.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Older Invoices - Factoring Can Help!!, small business, Success in small business, without debt
Posted in Business Management, Cash flow, Factoring, Growing your business, New Business | No Comments »
Thursday, January 20th, 2011
As I have mentioned in past post CASH IS KING!! If you intend to drive your business to success you have to take charge of your cash flow and ensure that it is ‘flowing’. The issue of cash flow is a multi-faceted gem that needs to constantly be monitored and ‘polished’. You cannot realize business success without hopping in the driver’s seat and driving your cash flow. This is evidenced by the ever increasing number of business that are not thriving… and the number of “going out of business” notices that we are seeing. Yes, we are experiencing economic challenges in both the professional and personal sector, but we do not have to take a wait and see approach.
1. Get busy recognizing where your cash flow challenges are. Are you allowing those that buy your goods or services to adopt a slow pay policy? Whether it is a slow leak or a fast leak, slow payments are an increase in your cost of doing business. Put your customers on notice that they need to pay in a timely fashion. Whether you choose to adopt a policy where you require payment at time of providing goods/services or allow your customers to pay you within a certain time frame you need to maintain control of the process. I recommend the pay as you go option, but realize that may be something you will work with as your comfort level allows. Be aware that, if you allow customers to pay within a certain time frame it is essential that you don’t allow them to ‘forget’ about you. Follow up in the form of a statement – 15 to 30 days after payment was due. You might then try a follow up phone call or letter. It is a good idea to have a plan “B” in place, in the event the slow pay drags on beyond 60 or 90 days; either in-house collector or a collection agency. The phone calls don’t have to be threatening. We find that making calls as a courtesy, “We wanted to ensure you received the invoice and that there is not a problem with the services you received,” is often all it takes.
2. Funding – A revolving line of credit with your lender is a good tool to establish in your business arsenal. A revolving line of credit can open up funds to allow you to take advantage of cash payments to your vendors, when they offer specials, and a plethora of advantages to keeping “cash on hand”. In the event that a revolving line of credit is unavailable to you in your business (often the case with new startups or those that might be extended beyond what the lender feels is a good risk) there are some wonderful alternate funding options open. Factoring is a great option to the traditional lender and is a great way for a business to improve cash flow without incurring additional debt.
3. There is a lot to be said for the tried and true art of putting something away for a rainy day. We all know that in business, as in life, there are ebbs and flows. If you have a program set up with your lending institution where they take out a certain percentage of your deposits, off the top before they even hit your business account, you will find that it is easier to implement a savings program. If you can establish this practice in the good times, then when times are lean, you may have set aside enough to fall back on.
Please contact our office and we can discuss some of our alternate funding options to help improve your cash flow. Or you can email me directly at Kim@Funding4You.com.
Tags: alternate financial products, bootstrap your business to success, cash is king, cash on demand, debt-free, Factoring, Older Invoices - Factoring Can Help!!, success, sucess in small businesses, without debt
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Monday, January 17th, 2011
I recently read an article by Keith Mabe. The article was an excellent discussion of the recovery of our economy and cited some great information about whether we are actually headed to better times. Mr. Mabe cited comments made by Robert Pollin, an economic professor from the University of Massachusetts-Amherst. Dr Pollin pointed to the fact that an economic recovery can only occur if small businesses can be actively involved in the process. Pollin went on to state that such involvement by the small business sector can be difficult due to the problems inherent in obtaining funding through the regular crediting channels. Mr. Mabe discussed factoring and how it can be used to relieve the cash flow issues business owners deal with.
Mabe pointed out that: “It is critical that businesses acquire a funding source that is readily available and dependable. Factoring (also known as Accounts Receivable Financing) is an often overlooked choice for businesses trying to participate in the recovery. This form of financing is not widely known, but allows businesses to capitalize on the power of their outstanding invoices. Factoring can be a valuable mechanism to turn business invoices into immediate cash, enabling them to fund business operations.”
The biggest thing that I came away with, from this article, was that we need to be open to alternate ways of doing business. Whether, as a business owner, you need to address cash flow issues so that you can pay your employees in a timely fashion, or get early pay discounts from suppliers, funds that you can obtain without going into debt with a normal lender can benefit your business. By converting your receivables into cash you can regain control of your business and deal from a more financially savvy position. The business owner is left with the control of how quickly he/she wants to grow their business. Factoring can be used for a short term fix, or a long term cash flow tool.
As Mr. Mabe concluded: “Factoring has become an important small business financial tool in the midst of this uncertain economic environment, as it has proven to be a cost effective alternative for working capital to fuel business growth and to timely pay sensitive cash obligations.”
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, sucess in small businesses, without debt
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Monday, January 17th, 2011
Ensure:
Don’t feel that, because you have implemented best practices, they are best left on autopilot. To ensure that they are working for your business you should evaluate the effectiveness of the new policies. This can be done by scheduling follow-up meetings with employees. Find out what works and what doesn’t. Tweak your best practices to fit your particular business situation.
This step is absolutely critical. You may approach this final step by having a monthly meeting (perhaps bring in lunch or have an off-site teambuilding activity) or appoint a compliance officer who follows up with individual employees and departments.
Success for all businesses:
You may already be familiar with best practices, but have always assumed that the concept was designed for big business. These policies have their place with a business at any level. After all, there is a reason those mega-companies have grown to the level they have achieved. Implementing best practices can be a good first step toward growing your business in 2011.
Email Kim@Funding4You.com to discuss how our funding products can be put to work for you to grow your business.
Tags: alternate financial products, cash is king, Factoring, Grow your business, small business, success, sucess in small businesses, without debt
Posted in Business Management, Cash flow, Factoring, Growing your business, New Business | No Comments »
