Posts Tagged ‘without debt’
Thursday, December 22nd, 2011
With the ongoing financial challenges of the current economic climate, it is fairly obvious that entrepreneurs need to be financially savvy as well as creative in how they drive their businesses. The banking industry is tightening up their credit score standards and alternatives once available to the small business owner are no longer viable options.
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.
Tags: Factoring, Grow your business, Older Invoices - Factoring Can Help!!, small business, Success in small business, sucess in small businesses, without debt
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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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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
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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
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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 »
Friday, January 7th, 2011
As I posted yesterday, Factoring is a great short term solution to cash flow challenges that sometimes face business owners. There are a number of other products that we offer. Following you will find a brief outline of some other options. If you or someone you know is considering cash flow assistance for their business please feel free to contact our offices and we can discuss your alternatives.
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.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Older Invoices - Factoring Can Help!!, small business, sucess in small businesses, without debt
Posted in Cash flow, Factoring, Growing your business, New Business | No Comments »
Wednesday, May 6th, 2009
How to Win the Cash Game
We all agree that Cash is King for any business owner, especially entrepreneurs, start-up companies, and companies experiencing growth. But how do business owners get “Cash to be King” in their business? The solution is accounts receivable funding, commonly know as factoring.
Factoring is the most under utilized and often misunderstood form of commercial financing available to businesses. Most business owners are completely unaware of its existence. The factoring industry places approx. 80 billion dollars in the economy each year, but business owners are still unsure about using it as a funding tool.
What is Factoring?
Factoring is a way of increasing your cash on hand and improving your operational cash flow by simply exchanging your receivables for cash. Factoring is not a loan; therefore no additional debt is created. The finance company, known as the factor, purchases the receivables at a slight discount of the full face value of the invoice.
A Powerful Example
A small business owner recently expressed concerns about how fast his business was growing. He was excited about the growth but was experiencing “growing pains”. He had great clients but his invoices were outstanding for 30-45 days. He struggled to meet weekly payroll and actually had to turn business away because he couldn’t afford to cover the added payroll expense. We discussed factoring and had his account set-up in 7 days. Now as he invoices his clients, he faxes a copy to his factor who wires funds into his account within 24 hours. His cash flow has instantly improved and he has the funds available to cover payroll and take on larger clients. He explained, “I sleep better at night knowing I have money to cover payroll. I can now go after larger clients and really build my business.”
Relieve the Stress
Factoring provides the working capital to growing businesses and helps them become more successful. It is commonly used as a short-term bridge to relieve the stress related to lack of operating capital. As the business becomes more successful, most business move on to more traditional finance programs. Until then, factoring is a fast, flexible, and convenient alternative for many businesses.
The Factoring Alliance LLC provides factoring services to small businesses and start-up companies. Please contact Kim Deveney at 888-493-3666 kim@thefactoringalliance.com for more information.
Tags: cash is king, cash on demand, debt-free, without debt
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