Due to increased regulatory pressures, as well as an increasing number of foreclosures and related banking woes, fewer banks are in a position to assist small business owners in their quest for financial options to keep the cash flowing for the business owner. There is help in the form of accounts receivable financing for the small to medium sized business.

Accounts receivable financing, and other alternative financing options, are available through American Funding Solutions. We are a factoring business and we differ from a bank in many respects. A banker extends credit based on the financial condition and cash flow of the borrower. The borrower is expected to keep up with regular (usually monthly) payments to the bank… whether business is good or slow. Therefore, it is often required that the borrower meet certain financial requirements, including, but not limited to, a long, successful history of business with an acceptable cash flow history. These requirements are difficult for start-ups and certainly may prove difficult during the recent economic challenges we have been facing.

On the other hand, a factoring company does not require the client to demonstrate a proven history of profitability. As a rule, factoring companies are more interested in the credit history/financial strength of the client’s customers. If those that the client provides goods or services for are financially strong, then the factor can offer financing in the form of accounts receivable purchasing.

In other words, the factoring company views an invoice as an asset. The goods/services are delivered to the customer, the invoice is verified, and the advance is funded. Often times the transaction can be completed in a couple of days and the business owner can have the necessary cash to meet payroll, purchase supplies, pay rent, whatever is needed to keep the business’ cash flowing.

Factors often work hand in hand with banks. A business may have a working relationship with a banking institution and find that they suddenly have a need for additional working capital. Whether it is due to the sudden onset of the need or the fact that the client has a need that exceeds an existing line of credit, the banker can put the client in touch with a factor that can assist with a type of bridge financing that alleviates the crisis.

Factoring receivables is a great financing tool often utilized by small businesses. It provides a flexible, readily available financial tool to increase liquidity. We at American Funding Solutions are in business to provide working capital to growing businesses and we would like to help you sustain your business’ growth.

(1) “getting found first” by potential customers who are searching for solutions to their needs or problems;

(2) converting those who have found the firm into a new engagement;

(3) transforming traditional outbound activities for more inbound traffic; and

(4) continually monitoring and measuring results to refine tactics in order to deliver more ROI.

At its core, rather than interrupting people to get their attention with emails, cold calls, snail mail and the like, inbound marketing relies on the principle that visitors will find and come to you if you have the right mix of online presence, thought leadership, infrastructure, tools and discipline in place.”

If you would like to read more please visit http://www.accountingtoday.com and type “Inbound Marketing—The Next Evolution in Marketing Accounting Services” in the search box.

Financial Planners Recommend Spring Financial Cleaning
WASHINGTON, D.C. (MARCH 15, 2011)

BY ACCOUNTING TODAY STAFF

Tax season is in full bloom and Americans are up to their elbows in statements, receipts and 1099s, but it may be a good time for people to clean up their finances while they’re doing their spring cleaning and taking their taxes to their accountants.

The IRS tells us it will only take an hour or so to fill out our 1040s, but they clearly have not factored in the time it takes us to sort through – let alone find – our financial information. Thoughts of a giant post–April 15th bonfire may come to mind, but before you light the match, consider another, more sensible way to handle your finances.

Certified Financial Planner Board of Standards Consumer Advocate Eleanor Blayney, CFP, recommends that while you are cleaning up your house after a long winter celebrate spring by cleaning up your finances as well.
Your goal should be to get into those forgotten corners, deal with the clutter, recycle the stuff that has value and throw out the rest,” said Blayney.

Here are 10 ways to freshen up your finances:

1. Store it. Set up a three–tier storage system: get hanging files for information you will need within the next year, such as receipts or transaction confirmations; storage bins for documents you need to save for more than one year, such as tax returns (3 years after filing) or real estate records (for as long as you own the property, plus 3 years); and a fireproof, lockable box for difficult–to–replace items such as your Social Security card, wills and other estate planning documents.

2. Review your beneficiaries. Make a clean sweep of your estate plan by checking that the correct beneficiaries are designated on your insurance policies and qualified retirement accounts. For example, minor children cannot inherit assets outright without a trust or custodian.

3. Double check your estate plan. While you have your hands on those estate planning documents, reread them to see if anything in your life has changed that would make revisions necessary.

4. Get your free credit report. It’s available annually (www.annualcreditreport.com). Get a copy and be sure to read it closely. That way, you can clean up any entries made by creditors that are incorrect.

5. Save automatically. Set up a regular transfer from your paycheck or checking account to a savings account and begin building an emergency reserve. Then forget about those savings. Just like that dust accumulating on the top of the fridge, it’s out of sight, out of mind and most importantly, out of your easy reach.

6. Go digital. Don’t ever again trip over the clutter of your busy life and forget to pay a bill or a credit card account on time. Use your mobile phone or computer to send yourself reminders of payments due and thereby avoid those dirty, rotten late fees!

7. Protect what you own. While you are changing your clocks and checking your smoke detectors, check your home or renter’s insurance as well. Make sure you have the necessary amount of coverage to avoid any major out–of–pocket losses in the event of fire, theft or other disaster.

8. Consolidate. Make your next spring cleaning a much easier job by consolidating your investment accounts with one provider. Often, custodians will provide a single statement on your accounts, even if the accounts must be separately titled. Having a single source for your investment information makes the job of monitoring and rebalancing your accounts more efficient. Be aware, however, that holding all your accounts with a single custodian can limit the amount of SIPC or FDIC coverage available to you.

9. Take a deep dive into your finances. When those spring showers keep you cooped up for a long afternoon, review all your checks, credit card statements and debit transactions from the year before. If you have online banking, you can usually export a year’s worth of transactions into a spreadsheet, which you can then sort and classify. You’ll see where you are spending the most money and can therefore focus your budgeting and cost–saving efforts accordingly. This review should also provide the basis for a workable budget going forward – a must for anyone wanting to clean up his or her finances.

10. Get help from a CFP professional. Once your financial information is in order, take it to a Certified Financial Planner professional who can then develop a comprehensive financial plan for getting you to your lifetime goals. To find a CFP professional in your area, go to www.cfp.net.

The article highlighted a different perspective on business development. There were some great take-aways that I would like to share with you. (Thank you Mr. Keseric for your insights). And, though I believe these are all things that we are aware of, I think we forget to be actively engaged. I know that I found his ‘laundry list’ a good reminder. It doesn’t matter what your business is, or how large/small you are, you can implement and benefit from these suggestions.

• Stay in close contact with your clients and ask them for referrals.
• Suggest addition services that your firm provides for your current clients.
• Work your referral network as you never know when it will be the right place and right time.
• Network like a politician running for office—meet, greet and shake a ton of hands.
• Be observant. Look for new businesses coming into your market.
• Be positive in your attitude.
• Embrace technology. Use it today because we may not understand it tomorrow.
• Be passionate in what you do and how you do it. Others will see it.
• Host and moderate a seminar for business owners on topics that can help them run their business better. Invite clients and prospects, and offer your referral sources to bring in clients. Don’t make it an infomercial for accounting services. Make the topics unrelated to your firm. By doing so you will make the program more impactful and important.
• Follow up on everything you do and say (see dot above).
• Look at how you get to places vs. just looking at the destination only. In other words, don’t focus on the revenues only, but focus on the relationship that will bring you to those revenues.
• Improve the internal communications avenues in your firm by responding to e-mails and voicemail messages…the first time.
• Market your firm year round.
• Join organizations to meet new people and businesses. Time consuming but needs to be done.
• Easier to say than do, but be more welcoming to others. Give people a reason to remember you. Enjoy being yourself and let others see you who you are.
• Be a teammate to your colleagues.
• Lead and look to the future on how to grow your business. There is no book or iron-proof marketing plan available, just hard work on your part.
• Strive to be rewarded as a trusted advisor by clients.
• Get social: FaceBook, LinkedIn, others. They’re too big to ignore and they’re not going away.

As you all know, I am all about the business of helping grow your business… whether it is by offering funding options or information.

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.

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.”

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.

Execute:

If you simply take stock of the issues you will not see much of an improvement. While knowledge is power, you have to implement that knowledge into real action. Turn your ideas into policies, and formalize them. Make a big deal out of introducing them to your employees and explain the rationale behind them. Best practices are intended to improve your company’s financial bottom line. Ideally, this will translate into a positive outcome for everyone. During the meeting to discuss the new policies make certain to emphasize the constructive nature of the changes. You may also want to put the policies in writing and have them available at the meeting.

Here are some examples of best practices that other businesses have implemented.

 Invoice for goods and/or services at the time they are provided.

 Set a specific time interval to deal with collections, ideally once a week.

 Estimate your income tax obligation monthly, not just quarterly. When payments come due, there won’t be any major surprises.

 Provide cross training for employees where practical. That way you won’t have downtime if someone is ill or out for a period of time.

 Utilize technology where you can (i.e. set us a merchant account to receive payments).

 If possible, have employees who incur billable time use a timer. A few minutes lost here and there can add up, and this can be a big ‘leak’ that needs to be plugged.

 Review your pricing structure. Ensure that you are building in enough to cover overhead and still realize enough profit to not only sustain but grow your business.

 Run inventory reports regularly. This will allow you to keep close tabs on your inventory and not have any surprises. This may also allow you to shop for the items you need at a lower price rather than having to replace something last minute and potentially having to pay a premium.

This is not a difficult process. You simply need to utilize the publicized practices of the most successful businesses and adapt them to your business situation. Also keep in mind that you can network with other business owners that you know to see how they have approached implementing best practices. If cash flow is hampering some of your best practices, such as maintaining your inventory numbers, then please contact us for a solution.

There are three stages you need to address when you decide to apply best practices to your business model.

Identify:
It is imperative that you first identify the problems are you trying to solve. What are you pain points?
• Cash flow
• Collections
• Payroll
• Reduction in your customer base
• Timely payables
• Inventory

It might be helpful if you consult your employees about issues they see in the company. Employees can often see where the disconnect is and will appreciate you taking the time to assist with their pain points.

We at the Factoring Alliance can assist you with cash flow to help with a number of the above issues. From making your payroll on time, to cash flow to keep up with inventory needs we can partner with you to help you grow you business. Please feel free to contact us about our services and products or email Kim@Funding4You.com.

Purchase Order Funding – funding to small businesses to fill their orders before an invoice is created.

Bridge Loans – short term loans of 6 – 8 months that provide time to secure long term financing options.

Vendor Assurance – helping small businesses qualify for credit terms from their vendors by paying their vendors directly; used in conjunction with factoring.

Start-up Loans – unsecured loans specifically for start-up businesses based on personal credit.