Business Financing For Private Investigation And Security Firms

April 20, 2012 By

Most investigation agencies and private security firms start running into cash flow problems when they begin offering 30 day payment terms to their commercial (or insurance company) customers. Unless the security company has adequate cash reserves, this can lead to problems where the company runs low in funds. At the very least, it will complicate managing the company. At it’s very worst, this problem can prevent you from taking on new clients and put you out of business. Refusing to offer terms is no a solution unfortunately -  if you refuse to offer terms your customers will likely go to a competitor.

One to solve this problem is to use business financing to cover your corporate expenses while waiting for your customers to pay. However, getting a business loan can be very difficult. Most financial institutions have very stringent lending criteria and will demand impeccable financial statements, hard assets as collateral and a long track record of success before offering a business loan. Realistically, few security companies or agencies will be able to meet this criteria. One alternative that has been gaining popularity as a way to address this financial problem is invoice financing.

Invoice financing helps security companies by accelerating the revenues that are tied to slow paying invoices. This provides the cash flow the security company needs to cover important expenses such as payroll. It also puts the security services company on a stable financial footing, which will enable it to take on new customers.

The finance company will usually advance a portion of your unpaid invoices – using two installments. The first installment covers up to 90% of your accounts receivable and is advanced as soon as you invoice your clients for completed work. The remaining 10%, less the funding fee, is advanced once your customers pay in full.

The most important requirement to qualify for invoice financing is to have credit worthy commercial clients. This is important as your invoices are used for collateral. Additionally, your company must also meet the following criteria:

  • It should only invoice for completed services
  • Invoices should be free of encumbrances (liens)
  • Company should not have significant tax or legal challenges
  • Owners and managers should have experience and a good reputation

An advantage of invoice financing over a business loan is that its flexible. Invoice financing lines are designed to increase as your sales grow. This makes them an ideal solution for growing security agencies that have working capital problems due to slow paying customers.

 

Filed Under: Staffing - Security

Business Financing For Freight And Trucking Companies

April 20, 2012 By

Most transportation companies run into cash flow problems when they start offering 30-day payment terms to customers without having the necessary cash reserves. This can lead into serious cash flow problems that jeopardize the trucking company’s ability to pay drivers, fuel and other critical expenses. At best, it prevents you from taking on new loads. At worst, it could send your transportation company into a financial tailspin. Of course, the easy way to fix this is to use business financing to cover company expenses while waiting for customers to pay. For many, this is easier said than done.

Getting a business loan in the current environment can be very difficult. Most financial institutions will demand spotless financial statements – even a blemish can get your application declined. They will also demand substantial collateral – enough to cover for the business loan. Lastly, they will also want to see a track record that shows many years of successful and growing operations. The reality is that few growing transportation companies will be able to meet this criteria. However, there is an option that has been gaining traction as a way to finance growing transportation companies – it’s called invoice financing.

Invoice financing accelerates the revenues that are tied to your slow paying invoices. It provides the working capital your transportation company needs to pay operating expenses. Perhaps more importantly – it helps you take on new customers while minimizing the worries associated with slow pays. Most invoice financing transactions can advance about 90% of your outstanding invoices. The remaining 10%, less fees, is rebated once your customers pay on their normal schedule.

The most important requirement to qualify for invoice financing is to have brokers and shippers with good commercial credit. Aside from that, your company should also meet this criteria:

  • Have unencumbered invoices/freight bills
  • Be free of serious legal and tax problems
  • Invoice for delivered loads
  • Be owned and managed by experienced and reputable individuals

The most important advantage of invoice financing lines over business loans is their flexibility – invoice financing lines with increase as your sales grow. This makes them a great solution for trucking companies that have working capital problems due to slow paying customers.

Filed Under: Transportation

Business Financing For Fluid Hauling And Saltwater Disposal Companies

April 15, 2012 By

The past years have shown an important increase in demand for companies that specialize in hauling oilfield fluids and saltwater. This in turn has created a substantial opportunity for the industry. However, with this growth opportunity also come challenges. Operating a fluid hauling and saltwater disposal business is cash flow intensive. The company has to pay for drivers, fuel, vacuume truck repairs and other office expenses. And most of these expenses have to be paid on a regular basis. On the other hand, most oil and gas customers pay their invoices in 30 to 60 days. Few companies can afford to wait that long for payment, which leaves the owner of the fluid hauling company in the middle of a tug of war between income and expenses.

One way to solve this problem is to use business financing to cover company expenses, while waiting for the customer to pay their invoices. The problem with this strategy is that few oilfield fluid /saltwater hauling and disposal companies can actually qualify for a business loan because institutions usually have strict demands. To qualify, most companies need impeccable financial statements, plenty of collateral, and a long track record of profitability. This puts business loans out of the reach of many small business owners. However, there is an alternative that has been gaining traction as a solution to this cash flow problem, it’s called invoice financing.

Invoice financing accelerates the revenues of the fluid hauling company by providing an advance on their slow paying invoices. This provides the working capital your business needs to operate while the financing company holds the invoices. But more importantly, it provides the platform you need for growth since it enables you to take on new clients while minimizing the worries about slow payments.

Most invoice financing transactions for oilfield hauling companies are structured by advancing funds in two installments. The first installment is advanced as soon as the work is completed and covers 80% to 90% of the invoice value. The second installment, which covers the remaining 10% to 20% (less a fee) is advanced once the customer pays the invoice in full when it’s due.

One advantage of invoice financing over other solutions is that it’s easier to obtain. The most important requirement to qualify is to have customers with solid commercial credit. This is critical because their credit acts as collateral for the transaction. Additionally, your company should be free of major tax/legal problems, have unencumbered invoices and reputable management.

Perhaps the biggest benefit of invoice financing over a business loan is that the line is flexible and can grow with your sales, as long as your company meets the funding criteria. This makes invoice financing an ideal solution for growing oilfield fluid hauling and salt water disposal companies that have cash flow problems due to slow paying customers.

Filed Under: Oil and Gas

Business Financing For Oilfield Transportation Companies

April 14, 2012 By

The past few years have seen an increase in demand for oilfield transportation companies. While oil and gas companies make excellent customers because of their solid financial performance, they also tend to pay their invoices in 30 to 60 days. This can create a problem for the transportation company because they have a number of immediate expenses – such as paying for drivers, fuel, and vacuum truck repairs – and few can afford to wait for client payments. But the impact of slow payments is not just in operations – it affects growth. Few oilfield transportation companies can afford to cover their expenses and take on new customers, while also waiting for customer payments. They just don’t have the capital.

One way to solve this problem is to use business financing as a way to cover ongoing expenses and then settling the funding with the institutions once your customers pay. Unfortunately, most financial institutions have very strict lending criteria and will only provide business loans to prime customers – those that have spotless financial statements, substantial assets that can be used as collateral, and a track record of profitable operations. The reality is that few oilfield transportation companies can qualify for a business loan under these conditions. For many companies, a better solution to this problem is to use invoice financing for oil and gas companies.

Invoice financing solves this problem by advancing a portion of your slow paying receivables, which gives you an immediate injection of working capital. You can use these funds to cover expenses while the funding company holds the invoices as collateral. The transactions close once your customers pay on their regular schedule (they don’t need to pay sooner). Aside from streamlining operations, invoice financing also positions your company for growth since the worries about slow paying customers are minimized.

Most invoice financing transactions are structured as a two installment advance on your slow paying invoices. The funding company provides an initial installment advance, usually about 90% of invoices, once the loads are delivered and the work is completed. The remaining 10%, less the fees, is advanced once the invoices are paid for by your customer – which settles the transaction.

Qualifying for invoice financing is easier than qualifying for conventional business loans. The most important requirement is that your customers must have good commercial credit. Fortunately, the oil and gas industry is doing well and most companies have solid credit. Additionally, you should only invoice for delivered/accepted loads, your invoices should be unencumbered by liens and the company owners should have good industry knowledge and reputation.

One important advantage of invoice financing is flexibility - the line can grow with your sales as long as your company meets the funding criteria. This makes invoice financing an ideal solution for growing oilfield transportation companies that have working capital problems due to slow paying customers.

Filed Under: Oil and Gas

Business Financing For Oilfield Services Companies

April 14, 2012 By

One of the challenges of working oilfield service contracts for an oil and gas company is that they often pay their invoices in 30 to 60 days. This is a common business practice where larger companies demand payment terms from their vendors. Basically, you have to give them up to 60 days to pay an invoice as a condition of doing business with them. Unfortunately, this is just a cost of doing business and little can be done about it. But for many oilfield service companies, the cost can be too high. Few companies can afford to cover their expenses while waiting for payment. Even fewer can afford to take on new clients for fear that the slow payments may create working capital problems. It can be a nasty catch 22.

One way to solve this problem is to use business financing as a way to fund your business while waiting for customer payments. Although this is a fine strategy, getting business financing in the current environment is very difficult. Most lending institutions have stringent requirements that have to be met before qualifying for a business loan. Usually, the client will need to have solid financial statements, substantial collateral and a multi-year track record of profitable operations. Under these conditions, few small or midsized oilfield companies can qualify for a business loan. Fortunately, business loans are not the only option for companies with working capital problems. A new solution, called invoice financing, has been gaining traction as a flexible way for small and midsized companies to solve their working capital problems.

Invoice financing for oilfield service companies offers a simple proposition. A financing company advances funds to your oilfield services business using your slow paying invoices as collateral. You get an immediate working capital injection, which enables you to cover operating expenses. More importantly, it also provides predictable cash flow which puts you in a better position to take on new customers. And when used correctly on an ongoing basis, invoice financing can provide the financial stability required to successfully operate your company.

The most important requirement to qualify for invoice financing is to have customers with good commercial credit. This is very important because the finance company will be advancing funds to you, using these invoices as collateral. Additionally, you should only invoice for completed work, have unencumbered accounts receivable, be free of serious tax/legal problems, and lastly, have a good reputation in the industry.

What makes invoice financing attractive to oilfield services companies is that it’s  more flexible than conventional business loans. The line is designed to increase with your sales, as long as your company meets the funding criteria. This makes invoice financing an ideal solution for growing oilfield services companies that have working capital problems due to slow paying customers.

Filed Under: Oil and Gas

Business Financing For Legal Services Staffing Companies

April 14, 2012 By

Most staffing companies have very demanding cash flows. On one hand, employees need to be paid on a weekly or biweekly basis. And since employees are critical, you must always have enough funds to meet payroll. But on the other hand, corporate legal customers always demand that you give them 30 to 60 days to pay their invoices. This means that your staffing agency must have enough working capital to cover expenses while waiting for payment. If it doesn’t, then you will not be able to take on new customers Or worse, if the situation is not managed correctly it could   spiral into cash flow crisis.

One way to avoid this problem is to use business financing to cover company expenses while waiting for customer payments. This can be a challenge for many small and midsized legal services staffing companies because most financial institutions have very strict lending criteria. They will only provide business loans to companies that have solid financial statements, plenty of available collateral and a long track record of profitability. This will rule out all but the most successful and established staffing companies. However, a business loan is not the only – or necessarily the best solution to this problem.

Another way to solve this cash flow problem is to use invoice financing. Invoice financing provides an advance on your slow paying invoices while using them as collateral. This gives your company the necessary funds to cover ongoing expenses while minimizing the problems that are created by slow paying customers. But more importantly, it gives your staffing agency the financial cushion that is needed to take on new customers and grow.

As opposed to conventional business financing solutions, invoice financing does not require that you have substantial assets or a very long track records. The most important requirement is that your staffing service customers must have good commercial credit. This is critical because their invoices act as collateral for the transaction. Additionally, your company should only invoice for completed services and should not have any serious legal/tax problems. Lastly, the company owners and managers should have experience in the industry and a solid reputation.

One of the most important advantages of invoice financing over a conventional business loan is that invoice financing lines are designed to grow with your company. They will increase with your sales as long as your company and your customers meet the funding requirements. This makes invoice financing an ideal solution for growing legal services staffing agencies that have cash flow problems due to slow paying customers.

 

Filed Under: Staffing - Security

Business Financing For Food Service Companies

December 8, 2011 By

Food service companies can be very dynamic and complex operations. Whether they handle catering or full fledged facilities management one thing is for certain – to be stressful the business needs to run like clockwork. However, it is not uncommon for food service companies to run into cash flow problems. Cash flow problems stem from the fact that food service companies have a number of expenses that have to be paid regularly, such as payroll, suppliers and cleaning services On the other hand, commercial and institutional clients pay their invoices in 30 to 60 days. Basically they have immediate expenses but slow revenues.

If the company has a reasonable cash reserve, having immediate regular expenses, coupled with slow revenues will not be a problem. Unfortunately, few small or midsize food service companies have a cash reserve. One way to address this problem is to use business financing to cover expenses, while waiting to get paid.

Getting business financing can be a challenge on it’s own. Most institutions only provide business loans to companies that meet very strict criteria. They must have impeccable financial statements, solid collateral and be able to show years of profitable operations. Not every small or midsize food service company can meet this criteria. However, a business loan may not necessarily be the best solution for this cash flow problem. For many, the better solution may be to use invoice financing.

Invoice financing accelerates your revenues due from slow paying invoices, providing the cash flow you need to cover your expenses and grow the company. This eliminates the pressures created by slow paying customers and allows the owners to focus on managing and growing the firm. Most invoice financing transactions are structured through financial intermediaries that advance funds against your slow paying invoices and then wait until your customers pay to settled the account.

Invoice financing lines can be easier to get than a conventional small business loan because financing companies look at your invoices as your strongest collateral. To qualify, your customers need to have good commercial credit and your invoices need to be free of liens or encumbrances. This makes invoice financing an ideal solution for small and midsized food services companies that have great potential but are being dragged down by slow paying customers.

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We offer business loan financing in Arkansas and in all other states. (*)

Filed Under: Business Services

Business Financing For Distributors and Wholesalers

November 30, 2011 By

For many small wholesalers and distributors, managing cash flow so that there is always enough cash to cover expenses can be very difficult. Suppliers usually need to be paid quickly, unless you have good credit terms with them. On the other hand, large customers pay their invoices slowly. Quick expenses and slow revenues can wreck havoc in your company unless the company has a substantial cash reserve. And actually, few distributors or wholesalers have any substantial reserves.

One way to address this problem is to try and slow expenses down while quickening invoice payments. You can do this by negotiating longer payment terms with your suppliers and by offering quick payment discounts to your customers. This strategy may work for some, but not for all because it is not always consistent. For many, a better solution may be to use business financing to bridge the gap between paying suppliers and collecting from customers.

One solution that has been gaining traction in recent years is invoice financing. Invoice financing can accelerate your revenues due from slow paying invoices, providing the funds you need to pay suppliers and other critical expenses. Invoice financing relieves you of the worry of having to wait for slow paying customers and provides predictable cash flow.

One important advantage of invoice financing is that it’s easier to obtain than a small business loan. The most important requirements are that your customers need to have good commercial credit and your invoices need to be unencumbered by any liens or judgements.

A major benefit of invoice financing is it’s flexibility. As opposed to a business loan that is for a fixed amount, your invoice financing line is directly and dynamically tied to your sales. This means that the line can easily increase to accommodate growth if your customers have solid credit.  This makes it an ideal solution for distributors and wholesalers who have solid potential but have cash flow problems because they can’t afford to wait up to 60 days to get paid by customers.

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We offer business loan financing in Arizona and in all states.

Filed Under: Wholesalers

Business Financing For Consulting Companies

November 29, 2011 By

Finding business financing for a consulting company can be a challenge. Most financial institutions tend to offer their products to companies that have strong assets that can be pledged as collateral – such as real estate, machinery, etc. Most consulting companies don’t have those types of assets, rather their assets are their talent pool of employees. Regardless, many small consulting companies commonly run into problems that could easily be fixed with proper access to business financing.

The most common cash flow problem that consulting companies encounter is caused by slow paying customers. Most consulting companies have to give their customers 30 to 60 days to pay their invoices. But this creates a problem if the company does not have the needed cash reserve to cover expenses while waiting to get paid. This can create a situation where the company could miss payroll – one of the most critical expenses for a consulting company.

One simple solution to this problem is to accelerate the revenues due from invoices by using invoice financing. This solution provides an advance against your invoices, which you can use to meet payroll and other critical expenses. And as opposed to a conventional business loan, invoice financing is relatively easy to obtain. The most important requirements include having customers with good commercial credit and having no tax or legal problems.

One additional benefit of invoice financing is that it adapts fairly well to the changing revenues of a consulting firm. As opposed to a small business loan with is fixed, the invoice financing line is tied directly to your sales. This means that the line can grow with your business, provided you sell your consulting services to companies with a solid commercial credit rating.

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Learn about business loan financing in Alaska

Filed Under: Business Services

Business Financing For Tool and Die Companies

November 23, 2011 By

Most companies in the tool and die business are facing economic challenges. On one hand they have customers that demand products at low prices, while insisting on paying their invoices on 30 to 60 days. On the other hand you have recurring company expenses – payroll, rent, suppliers and machine parts. The combination of razor thin margins, slow payments and immediate expenses can be difficult to manage for companies that don’t have adequate cash reserves.

Many tool and die companies address this issue by resorting to juggling expenses and asking for quick payments. These strategies can work, to a point. Ultimately, your cash flow still ends up being controlled by your customers and suppliers who can opt out. For many, a better to solution is to add business financing to their strategy.

However, for many companies, conventional business financing solutions like a business loan may not be an option. Most financial institutions have stringent requirements and will only provide a business loan (or line of credit) to companies that have substantial collateral, impeccable financials and a long track record of profits. This rules will usually disqualify most small or medium sized tool and die companies. However, a business loan is not necessarily the only – or the best – option to address cash flow problems from slow paying customers.

Invoice financing may be a better solution for many companies. Invoice financing solves this problem by financing your invoices from slow paying customers. This relieves you from having to wait for slow payments and provides the funds your tool and die company needs to pay suppliers, employees and other operational expenses. The transaction uses your invoices from credit worthy customers as collateral and is settled once your customers pay their invoices in full.

One major advantage of invoice financing over a small business loan is that it’s easier to obtain. The most important requirement is that your tool and die company needs to work with companies that have good commercial credit. Aside from that, your company needs to be free and clear of legal and taxation problems.

Invoice financing is an ideal solution for tool and die companies that have cash flow problems due to slow paying customers, but also have great potential.

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Learn more about us – we can offer business financing in Alabama.

Filed Under: Manufacturing

Business Financing For Security Guard Companies

November 18, 2011 By

Security companies, much like temporary staffing agencies, are very cash flow intensive businesses. This is specifically because a large part of their expenses are related to their payroll costs. Most security guard companies pay their employees every week – or at the most every two weeks. And for many, payroll is their biggest and most challenging expense.

Having this regular payroll liability can create a challenge for small security guard companies since most customers pays their invoices in 30 to 60 days. This creates a combination of quick expenses and slow income. This won’t be a problem if the company has sufficient cash reserves to cover it’s expenses. However, if it doesn’t have cash reserves, this could become a serious problem. Especially if some payments get delayed.

One way to solve this problem is to use business financing to create a financial buffer, that will allow you to meet expenses while waiting to get paid. However, most conventional business financing programs are very difficult to get. Most institutions have stringent requirements and will only provide a business loan (or line of credit) to security companies that meet very strict criteria: spotless financial statements, good track record and owners with substantial collateral. In reality, few security companies can meet this criteria.

One alternative that has been gaining popularity is invoice financing – a solution that is designed to solve cash flow problems created by slow paying customers. Invoice financing provides you with an advance on your slow paying invoices, accelerating your revenues and providing you with the liquidity you need to meet your operating expenses.

As opposed to a small business loan, qualifying for invoice financing is relatively easy. The most important requirement is that your customers need to have good commercial credit. This is important because you are using their paying power as collateral for the funding your security agency will be getting. Aside from this, it’s also important that your business be free of tax and legal problems.

Invoice financing is one of the few funding solutions that allows you to leverage the credit of your customers – this makes it an ideal solution for security guard companies whose biggest assets are their customer relationships.

Filed Under: Staffing - Security

Business Financing For Utility Contractors

November 17, 2011 By

Utility contracting businesses can be very cash flow intensive. On one hand, there are expenses that need to be met constantly, such as payroll, supplies, equipment, rent and so on. On the other hand, revenues are usually slowed down by the fact that most clients pay invoices pay in 30 to 60 days. Having immediate expenses and delayed revenues can create a problem if your company does not have a cash reserve that can be used to cover operational expenses.

One simple way to address this problem is to request a quick payment from your customers. For example, many utility contractors will offer a 2% discount if the customer (or general contractor) pays the invoice in 10 days. This can work if your customer is willing to participate and pay early. But ultimately, it’s their choice. For many, a better solution may be to use business financing to cover this gap between expenses and income – at least until your company is able to build a cash reserve.

However, getting a business loan (or line of credit) can be challenging in the current environment. Most lending institutions are conservative by nature and will only lend money to companies that have substantial assets, plenty of collateral and impeccable financial statements. Needless to say, few small/medium sized utility contractors can qualify for these products.

For many, a better solution may be invoice financing. Invoice financing can accelerate your revenues due from slow paying customers. This provides you with the funds you need to meet expenses and grow your business. The premise behind invoice financing is simple.  A finance company advances you funds using your invoices from slow (but credit worthy) customers as collateral. The transaction closes once your customer pays the invoice in full. And since the financing line is tied to your revenues, your funding line can grow alongside your sales, provided your customers have good commercial credit.

The biggest advantage of invoice financing is that it’s substantially easier to obtain than a small business loan. The biggest requirement is that your customers need to have solid credit. It’s OK if they pay slowly, provided that they pay. Aside from that, your utility contracting company needs to be clear of any legal or tax problems.

Filed Under: Construction and Utilities

Business Financing For Construction Supply Companies

November 9, 2011 By

Most companies in the construction industry have endured challenging times due to the real estate bubble and subsequent implosion. For the most part, construction grew to a halt leaving many construction supply companies with limited sales options. Those that did have sales found that customers would pay their invoices slowly – sometimes taking as long as 60 or even 70 days to pay invoices.

For small construction supply companies, waiting up to 70 days to get paid caused substantial cash flow problems. Unless your company had cash reserves, paying your own suppliers on time was difficult. Likewise, meeting payroll was difficult. And finding business financing in this environment was next to impossible. But for many, business financing was the only solution to survive and to eventually thrive.

For many construction supply companies getting a business loan or line of credit in not an option – most banks are not lending to the industry at this time. However there is a solution that can help minimize the problems that are created by slow paying customers – it’s called invoice financing. Furthermore, in many instances, invoice financing can be more effective that a business loan at solving cash flow problems due to slow paying customers.

Invoice financing offers a simple proposition. Instead of waiting up to 80 days to get paid by your clients, an invoice financing company advances funds using your invoices as collateral. The transaction then settles once your customer actually pays for the goods. However, for invoice financing to work, your customers need to have good commercial credit. It’s OK if they pay slowly – provided they have a track record of paying.

Invoice financing is usually easier to obtain than a small business loan. To qualify, your company usually has to meet three criteria:

  1. Your customers need to have good commercial credit
  2. Your company must be free of tax problems
  3. Your company must be free of legal problems

One important advantage of invoice financing is that it’s tied to your sales activity. This means that it will grow with your sales, provided your customers have good commercial credit. This makes invoice financing an ideal solution for construction supply companies that have good potential but have customers that are paying slowly.

Filed Under: Construction and Utilities

Business Financing For Automotive Supply Companies

November 8, 2011 By

Although the automotive industry has been through some turmoil in recent years, things are starting to get back to normal as the industry recovers and sales increase. However, many automotive supply companies still have a number of cash flow issues – in part because most of their clients pay their invoices in up to 90 days. This can create serious problems for the company, as it tries to juggle slow income and immediate expenses. Ultimately, this affects the company and all their downstream suppliers as well.

One simple way to address this problem is to ask customers for quick payments offering the common 2% discount for a net 10 payment. And while this strategy can work, it has one flaw. It leaves your company’s cash flow in the hands of your customer who can chose to opt out of quick payments at any time.

Another way to solve this problem is to use business financing to handle expenses while waiting for payment. However, finding conventional business financing, such as a business loan or line of credit, in the current environment is very difficult. Most banks will only provide business loans to companies that have a track record of pristine income statements and solid balance sheets. Unfortunately, this will leave many companies in the industry out of the running.

There is an alternative that has been gaining popularity as an alternative to a conventional business loan – it’s called invoice financing. Invoice financing solves the cash flow problem created by slow paying customers by funding your invoices for completed work. Basically a financial intermediary advances your invoice payment and holds the invoice as collateral. The transaction is closed once the end customer pays the invoice through normal payment terms.

One advantage of invoice financing is that it’s easier to obtain than a conventional small business loan. Most invoice financing plans only require that your company be free of legal and tax problems and that you do business with commercially credit worthy customers. This can make it an ideal solution for small and midsize auto supply companies that have good potential but have cash flow problems due to slow paying customers.

Filed Under: Automotive

Small Business Loan Alternative

August 26, 2011 By

Obtaining a small business loan in the current economic environment is very challenging. Most financing institutions are imposing constraints on the business loans they provide – they are only funding companies that have an impeccable track record, have solid assets and can present flawless financial statements. The problem with this is that after the protracted recession and credit crunch – few small businesses meet this criteria. Most won’t be able to get a small business loan. And given the current environment, small businesses need some access to financing or credit if they are going to grow.

There are other business financing alternatives to conventional small business loans – and many have been gaining traction during the recent recession. One of such alternatives is invoice financing.  Invoice financing is a solution that was created to help companies with a specific type of cash flow problem. It helps companies that have problems created by the combination of slow paying customers and suppliers that demand quick payments. This usually leaves the business owner in the middle. Some owners cope by juggling payments – when they can. And if they can’t juggle payments successfully, their business usually will suffer.

Invoice financing provides an upfront payment, paid by a financial company, for your slow paying invoices. You get quick funds for your business, while the financing company holds the invoice and waits for payment. The transaction concludes once the invoice is paid and all monies are settled. Many companies use invoice financing on an ongoing basis to ensure they have smooth cash flow.

As opposed to a business loan, invoice financing is relatively easy to obtain. The most important requirement is that your business must invoice credit worthy customers, as your invoices are the most important collateral for the finance company. Aside from that, your invoices need to be free from tax and legal encumbrances. This makes invoice financing a great solution for small businesses that have solid clients and good potential for growth.

Filed Under: Business Financing Tagged With: , ,

Emergency Business Financing

August 25, 2011 By

We are firm believers that the best way to prepare for a financial emergency is to prevent it in the first place. Preventing one usually involves planning, preparation and actually having the resources to keep a cash reserve to operate the company during tough times. Although we believe firmly in this approach – it has two limitations. The first one is that we have been in an challenging economic environment for a long time – making it difficult to accumulate reserves. And second, it’s impossible to plan for everything.

For some, it may make sense to have an emergency source of business financing that can help smooth things out during tough times. However, trying to get business financing during a cash flow emergency is an effort in futility. Few financial institutions are willing to finance companies during an emergency. A better approach is to try and line up the financing before the emergency hits.

For most companies, cash flow emergencies happen because customers pay their invoices slowly. On average, most invoices get paid within 45 days. However, as an effect of the recession and credit crunch, many companies are now taking longer to pay their invoices. For example, many companies that paid in net-45 are now paying in net-60 days, which affects small companies and creates serious cash flow problems. This problem can be solved – many times easily – using the right type of financing (hint: it’s not a business loan).

For many companies that have cash flow problems (due to slow paying customers) the best solution is to use invoice financing. Invoice financing provides upfront funding for slow paying invoices, which gives you the liquidity you need to operate your company without having to wait for the invoice to pay. The invoice financing company holds the invoice and then settles the transaction with you once the invoice is paid in full.

One advantage of invoice financing is that it’s easier to obtain than a small business loan. The most important requirement to qualify is to have invoices from commercially credit worthy customers. Aside from that, your invoices need to be free of legal or tax encumbrances.

Filed Under: Business Financing Tagged With: , ,

How Finance A Pallet Manufacturing And Supply Company

August 23, 2011 By

Pallet manufacturers and suppliers, like most industrial manufacturers, are used to facing  the cash flow constraints that are created when you have suppliers that demand quick payments, coupled with customers that want to pay invoices in net 30 to net 60 days. But it’s a sign of the times, as suppliers and customers are doing what they can to protect their cash flow.

This is usually not a problem for larger suppliers and manufacturers of pallets who have business financing or large cash reserves. However, this can present a serious problem for small and medium sized companies that don’t have financing or have minimal cash reserves.

Most business owners deal with this situation by juggling supplier payments – or trying to stretch customer payment terms. Additionally, many will try to give payment incentives to their customers, such as the conventional 2% discount if an invoice is paid in net 10 terms. Although both methods can help – neither solves the problem. For many, the better solution is to use business financing.

The challenge is that getting a business loan in this environment is very difficult. Most institutions have toughen their approval requirements. To qualify for a loan most, companies need strong financial statements, substantial assets for collateral and a solid track record. The problem is that few companies that have survived the recession meet this criteria.

There is one solution that is usually better than a small business loan at dealing with cash flow problems created by slow paying customers – it’s called invoice financing.  Invoice financing solves this problem by accelerating customer payments. This provides the needed liquidity and enables the pallet manufacturer and wholesaler to pay suppliers on time.

One advantage of invoice financing is that it;’s relatively easier to obtain than other financial products. To qualify, the company’s needs to have customers with good commercial credit. Additionally, the accounts receivable cannot be encumbered by prior loans, back taxes or lawsuits. This makes invoice financing an ideal solution for small and midsized pallet manufacturers.

Filed Under: Industrial Tagged With:

Should You Offer Net 30 Terms To Your Customers?

August 22, 2011 By

In most commercial sales – whether you sell products or services – customers expect that you will give them net 30 to net 60 terms to pay their invoices. In other words, you deliver today, and then wait 30 to 60 days to get paid. Now, a sale is not really a sale until you get paid. So that leads to the question – who should you offer net 30 terms to?

This is a very difficult question to answer. If you set a very tight credit policy and extend little credit, your sales will decline. On the other hand, of you have a lax policy and offer credit to everyone, your profits will decline (due to non payments). Ideally, if you can afford it, you should offer credit to those that deserve it and you should deny it to those that don’t deserve it.

The easiest way to determine a company’s credit worthiness is to get a commercial credit report. As opposed to personal credit reports, commercial credit reports are available to anyone. You just have to buy it. Two well known providers are Dun and Bradstreet and Experian Business Reports. These two services provide quality credit reports that are well accepted by the industry.

Both services offer reports of different complexity and pricing. As a rule of thumb, many companies use simple/cheap reports for small sales – and more complex (and expensive reports) for larger sales. For large sales, it’s not a bad idea to get reports from both services since no single service is perfect.

However, if your business has cash flow problems, this whole discussion on credit is probably moot since you probably can’t afford to offer 30 day net terms to customers. One alternative is to use a business financing solution to help your cash flow and enable you to offer 30 day terms. The problem is that obtaining business financing in the current environment is very challenging – especially for small businesses.

Although a business loan may be out of the reach of many business owners – there is a solution that is specifically designed to help companies that need to offer 30 days terms. It’s called invoice financing. This solution provides your company with an upfront discounted payment for your net 30 days invoices to credit worthy companies. This provides you with the cash flow you need to meet your obligations without having to worry about slow paying customers.

Filed Under: Business Financing Tagged With: , ,

How To Finance a Wholesale Supply Company

August 16, 2011 By

Most wholesalers operate as product re-sellers. They stock product from various suppliers and then distribute them to their own customers. It’s very common for wholesale supply companies to have cash flow problems at one point or another due to how their cash flow works. Unless the wholesaler is established, they will need to pay their suppliers at receipt of product – or shortly thereafter. On the other hand, customers will want to pay invoices on net 30 or net 60 terms, especially if they are large company. Having immediate expenses coupled with a slow payback can force wholesalers to use their reserves while waiting for customers to pay. And if those resources run out – the company will have serious problems.

If your company is in this position, you have three possible alternatives. One, you can ask suppliers to give you longer payment terms. Two, you can ask your customers to start paying sooner. And three, you can use business financing to cover the gap. It’s common for companies to try some or all of these alternatives.

One business financing tool that could be used in this scenario is a business loan. The challenge is that business loans are difficult to obtain. They have stringent collateral and financial requirements – and ultimately can take months to set up. This can discourage many business owners from pursuing this avenue. For many, a better alternative is to use invoice financing.

Invoice financing reduces the time it takes you to receive payment for your invoice – usually to just a couple of days. So, instead of waiting up to 60 days to get paid – you get paid in two or three days. It works by using a financial intermediary that advances your company funds based on the value of your invoices. Your company gets an immediate payment while they hold the invoice. The transaction is settled once the customer pays the invoice in full.

One advantage of invoice financing over a small business loan is that invoice financing is easier to obtain and can be setup quickly. Usually the most important requirement to qualify is that your customers need to have good commercial credit. Aside form that, they need to be clear of legal and tax problems. In terms of setup time, most invoice financing facilities can be setup in a week or so.

Invoice financing can be an ideal solution for small and mid sized wholesalers whose biggest problem is that they can afford to wait up 60 days to get paid by customers.

Filed Under: Industrial Tagged With: ,

How to Finance a Commercial Cleaning Company

August 15, 2011 By

There is a common belief that starting and running a commercial cleaning company is relatively easy and that it can be done without any business financing. In reality, any commercial cleaning company (aside from a one person company) that plans to grow will require an owner that is good juggling multiple tasks and proficient at managing cash flow.

Managing cash flow can be one of the most difficult jobs for an owner. This is because business owners are faced with a number of expenses that need to be covered immediately – however – they are also faced with customers that want to pay their invoices in 30 to 60 days. This situation forces them to cover expenses from their own savings (or cash reserves) while they wait for customers to pay. For many, this creates an unsustainable situation. However, this is a problem that can easily be solved with the right type of business financing.

Using the right type of business financing, your commercial cleaning company can avoid these cash flow problems and grow. One solution that has been gaining traction recently is invoice financing. It provides the equivalent of a quick payment for your invoice – which gives your cleaning company the necessary funds to cover it’s operational expenses. In turn, this allows you to capitalize on new growth opportunities without having to worry about slow paying customers.

Invoice financing works using a financial intermediary who buys the invoice from your company (at a small discount) for an immediate payment. Your company gets immediate funds while the financial intermediary waits for your invoice to pay. The transaction is settled once your customer pays for the invoice.

One advantage of invoice financing over a business loan is that is much easier to qualify for. The most important requirement to qualify for invoice financing is to have commercial customers who are reliable payers and have good credit. Aside from this, your company needs to be free of tax and legal problems. These easy qualification requirements make invoice financing an ideal solution for small companies that need funding and have good customers.

Filed Under: Business Services Tagged With: ,
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